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Risk Aversion and Trade-Union Membership

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  • Laszlo Goerke
  • Markus Pannenberg

Abstract

In an open-shop model of trade union membership with heterogeneity in risk attitudes, a worker's relative risk aversion can affect the decision to join a trade union. Furthermore, a shift in risk attitudes can alter collective bargaining outcomes. Using German panel data (GSOEP) and three novel direct measures of individual risk aversion, we find evidence of a significantly positive relationship between risk aversion and the likelihood of union membership. Additionally, we observe a negative correlation between bargained wages in aggregate and average risk preferences of union members. Our results suggest that an overall increase in risk aversion contributes to wage moderation and promotes employment.

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File URL: http://hdl.handle.net/10.1111/j.1467-9442.2012.01694.x
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Bibliographic Info

Article provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.

Volume (Year): 114 (2012)
Issue (Month): 2 (06)
Pages: 275-295

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Handle: RePEc:bla:scandj:v:114:y:2012:i:2:p:275-295

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References

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Citations

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Cited by:
  1. Schnabel, Claus, 2012. "Union Membership and Density: Some (Not So) Stylized Facts and Challenges," IZA Discussion Papers 6792, Institute for the Study of Labor (IZA).
  2. Jörg Baten & Andreas Böhm, 2010. "Children's Height and Parental Unemployment: A Large-Scale Anthropometric Study on Eastern Germany, 1994-2006," German Economic Review, Verein für Socialpolitik, vol. 11, pages 1-24, 02.
  3. Shelly Lundberg, 2012. "Personality and marital surplus," IZA Journal of Labor Economics, Springer, vol. 1(1), pages 1-21, December.
  4. Pfeifer, Christian, 2008. "A Note on Risk Aversion and Labour Market Outcomes: Further Evidence from German Survey Data," IZA Discussion Papers 3523, Institute for the Study of Labor (IZA).
  5. Jörg Baten & Andreas Böhm, 2008. "Trends of Children’s Height and Parental Unemployment: A Large-Scale Anthropometric Study on Eastern Germany, 1994 – 2006," CESifo Working Paper Series 2189, CESifo Group Munich.

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