Union Wage and Job Loss: A Cross-national Comparison

39 Pages Posted: 8 Jul 2020 Last revised: 17 Jul 2020

Date Written: July 15, 2020

Abstract

What members do unions protect? This question is relevant to an ongoing debate about union wage distribution. This paper investigates how unionization affects the relationship between involuntary job loss and a worker’s unobservable ability. Taking advantage of detailed micro-level panel data from four countries--Britain, Germany, Korea and Switzerland—I construct an index of workers’ unobservable abilities by estimating workers’ individual fixed effects. I find that unionization at the work place plays an important role. In Britain, Korea, and Switzerland, unions increase the earnings of lower ability workers but provide more job security to higher ability workers. The negative relationship between involuntary job loss and worker’s ability appears only in unionized workers. An exception is Germany, where lower ability workers in both unionized and non-unionized sectors are disproportionally more likely to lose jobs. The German case may associate with strong institutional forces at the industrial and national level.

Keywords: Cross country comparison, Involuntary job loss, Unobservable ability, Labor market institution, Unionization

JEL Classification: J23, J24, J51, J63, J65, P51

Suggested Citation

Wang, Xiupeng, Union Wage and Job Loss: A Cross-national Comparison (July 15, 2020). Available at SSRN: https://ssrn.com/abstract=3625794 or http://dx.doi.org/10.2139/ssrn.3625794

Xiupeng Wang (Contact Author)

Stanford University ( email )

Stanford, CA 94305
United States

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