What Determines Union Density? A Political Economy Model of the Labor Market with Empirical Evidence in the Context of European Countries
Journal Title: Review of Economics & Finance - Year 2017, Vol 10, Issue 4
Abstract
In this investigation, a political economy model of the labor market is proposed, where unions offer their (old and new) affiliates the combinations between the average real wage level and the standard deviation of wages or salaries. Globalization and other forces, however, have made it recently more difficult for the unions to pursue their policy in the backdrop of a declining union density. This has been established empirically for selected European countries. In an econometric exercise, we have also tested directly the impact of changes in real wages, minimum wage rate, and the effect of 90 to 10 decile ratio on the change in the degree of affiliation, which the unions were able to achieve in the recent past. We show empirically for a sample of European countries that unions can be either rewarded for their achievements or incentived to correct adverse developments in the labor market.
Authors and Affiliations
Michael Öllinger, Friedrich L. Sell
Keywords
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- EP ID EP258229
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