This paper analyzes the impact of unions in Colombia by answering the following questions: Is there a wage differential between unionized and non-unionized employees that can be attributed to unions? How large is this differential? And which part of wage inequality among employees can be explained by unions? In order to determine the existence and magnitude of the wage differential, an impact evaluation method called propensity score matching is used. The results show that there is a positive differential in favor of unionized workers. This differential fluctuates between 3% and 5% of the monthly wage, and between 15% and 16% of the hourly wage. When we analyze the impact for the private sector only, the wage differential increases, and varies between 22% and 27% of the monthly wage and between 52% and 56% of the hourly wage. In order to estimate the fraction of wage inequality that can be explained by unions, the Fields decomposition method is used. The results indicate that 4% of wage inequality between employees can be attributed to unions. Unlike the findings for other countries, unions in Colombia contribute to make worse income distribution. The data sample comes from Colombia’s National Household Survey for December 2000.