Do unions care about low-paid workers? Evidence from Norway

One of the core objectives of unions is to raise the wages of the lowest paid. Utilizing a panel of individual-matched employee–employer data covering the Norwegian private sector in the period 2000–2014, I investigate how workplace union density is related to individual low-pay risk. By exploiting changes in tax deductions for union members in Norway as a source of exogenous variation, a negative effect of increased union density on low-pay risk is identified within jobs. The results further suggest that the effect of local bargaining power on individual low-pay probability is larger among immigrants than among natives.