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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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Bibliographic Info

Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 88.

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Length: 23 p.
Date of creation: 2008
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp88

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Keywords: Employment; membership; risk aversion; trade union;

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References

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  1. Dohmen, Thomas J & Falk, Armin & Huffman, David & Schupp, Jürgen & Sunde, Uwe & Wagner, Gert Georg, 2006. "Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey," CEPR Discussion Papers 5517, C.E.P.R. Discussion Papers.
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Citations

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Cited by:
  1. Lundberg, Shelly, 2010. "Personality and Marital Surplus," IZA Discussion Papers 4945, Institute for the Study of Labor (IZA).
  2. 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).
  3. Uwe Jirjahn, 2013. "Der Beitrag der Arbeitsmarktökonomik zur Erforschung von Gewerkschaften und Tarifvertragsbeziehungen in Deutschland," Research Papers in Economics 2013-03, University of Trier, Department of Economics.
  4. 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.
  5. Schnabel, Claus, 2012. "Union membership and density: Some (not so) stylized facts and challenges," Discussion Papers 81, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  6. 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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