Trade unions and the wage gap between rural migrant and local urban workers in China

This study estimates union wage premiums and analyzes the influence of trade unions on the wage gap between rural migrants and local urban workers in China by employing the Blinder–Oaxaca decomposition method based on national longitudinal survey data from the China Family Panel Studies (2010–2018). The results indicate that the union wage premium among rural migrant workers is greater than that among local urban workers. The disparity in union density widens the wage gap, whereas the difference in union wage premiums narrows the wage gap between the two groups. Moreover, the contribution rate of the former is greater than that of the latter. These results suggest that expanding union coverage among rural migrant workers could effectively contribute to reducing the wage gap. • This study investigates the influence of unions on the wage gap between rural migrant and local urban workers in China. • This study employs the fixed-effect, propensity score marching and Blinder–Oaxaca decomposition methods. • The positive union wage premium among rural migrant workers is greater than that among local urban workers. • The disparity in union density (endowment effect) widens the wage gap, whereas the difference in union wage premiums (price effect) narrows the wage gap between the two groups.