Trade Union Membership and Dismissals
University of Trier - Institute of Labour Law and Industrial Relations in the European Community; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Institute for the Study of Labor (IZA)
University of Applied Sciences Bielefeld - Department of Business and Economics; DIW Berlin - GSOEP; Institute for the Study of Labor (IZA), Bonn
IZA Discussion Paper No. 5222
In Germany, there is no trade union membership wage premium, while the membership fee amounts to 1% of the gross wage. Therefore, prima facie, there are strong incentives to free-ride on the benefits of trade unionism. We establish empirical evidence for a private gain from trade union membership which has hitherto not been documented: in West Germany, union members are less likely to lose their jobs than non-members. In particular, using data from the German Socio-Economic Panel we can show that roughly 50% of the observed raw differential in individual dismissal rates can be explained by the estimated average partial effect of union membership.
Number of Pages in PDF File: 31
Keywords: dismissal, free-riding, trade union membership, survey data
JEL Classification: C23, H41, J51, J63working papers series
Date posted: October 12, 2010
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