What do Mexican unions do?

In recent years interest in the economic analysis of trade unions in developing countries has waned due to declining union density. Nevertheless, trade unions are still an important institution in many developing countries. Mexico, like many industrialised countries witnessed a decline in union density over the 1980s. However, unlike most industrialised countries, the rate of decline has slowed down in the last decade. This can be potentially accounted by the changing nature of unions in Mexico, and in particular the growth of independent unionism. The resurgence in unionisation rates naturally leads to the question: What are Mexican unions currently doing? This thesis investigates this question. Firstly, I provide a recapitulation of the history of trade unions in Mexico, and their relationship to the state. This history between ‘official’ unions and the state explains how the legal framework governing unions developed. Second, I turn my attention to the question what do unions do to wages in Mexico? In particular I investigate the union pay gap for the recent period 2005-2015. The raw wage gap is found to range between 18-22%. Estimates of the adjusted wage gap using a well-known decomposition suggest that union wage premium lies between 5.1-12.9%. Further estimates are invariant to application of selectivity corrected decomposition. The effect of unions on the wage distribution is considered, and the ‘sword-ofjustice’ effect is found to exist in Mexico. The evidence presented in this chapter suggests that whilst unions are marginalised in the labour market, they still play an important role. Third, I ask: Are there any gains to joining unions? I provide evidence on the worker compensation gains (losses) made by males upon joining (leaving) a union for the period 2005-1-2016q1. The transitions between a non-union and a union status are investigated using a difference-in-difference estimator. I find that joining and leaving a union is associated with small wage gains and losses, similar to what the literature reports for most industrialised nations. This chapter also contributes to the wider literature by providing the first estimates of the gain (loss) associated with joining (leaving) a union with respect to non-wage benefits. The findings show joining (leaving) a union increases (decreases) the probability of being in receipt of legally guaranteed benefits such as bonuses, paid holidays and pensions. Fourth, I examine the relationship between union strike petitions, a legal mechanism by which unions signal the desire to negotiate, and the business cycle. I focus on the time period 1990-2012, a period of legal and electoral institutional change in Mexico as the country democratised after the 70 year rule of the Institutional Revolutionary Party. I find that strike threats are counter-cyclical, unlike the established literature on actual strikes. I explore the causal relationship between elections and the rate of strike threats using a sharp regression discontinuity design and using information on close municipal elections. I find a causal effect from close electoral wins of right- and left-wing mayors on strike threats two years after an election. Victories for the right (left) party lead to an increase the number of strike threats two years after narrow wins. When disaggregating these effects by type of union it emerges that ‘officialist unions’ are behind the increased threats. I then provide evidence that this increase in strike threats stimulates electoral turnout in the following election. The evidence provided in this chapter suggests that whilst unions act in accordance with the cycle, they also behave contrary to the interests of their rank-and-file to satisfy political goals. Finally, I conclude that the evidence presented in this thesis suggests that although union density may be in decline, and officialist unions may not act in accordance to their rank-and-file's wishes, unions still have an important role to play in voicing worker's preferences and ensuring that employers comply with the law. In the last chapter I discuss further insights from the present research, detail the limitations, and outline an agenda for further research on the themes explored in this thesis.