Union Membership and Native-Immigrant Labour Market Gaps

Abstract We estimate the causal effects of union membership on labour market outcomes for natives and immigrants, exploiting quasi-experimental variation from large increases in Norway’s tax deduction for union dues. Union membership raises earnings and improves employment protection for native workers, while the private returns for non-Western immigrants are substantially smaller and often close to zero. Complementary survey evidence suggests that this gap is not explained by differences in information, preferences, or engagement with unions: immigrants receive similar information when joining, report similar preferences over job amenities, and are more likely than natives to seek union assistance. Instead, the combined administrative and survey evidence is consistent with differences in union-side behaviour. Immigrants report lower satisfaction after contacting unions for support and are more likely to believe that native workers and those with strong local networks receive greater benefits from membership. The impact is most pronounced in concentrated labour markets, indicating that relying on unions to address monopsony-based market failures may unintentionally amplify group inequalities.