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Unions and labour market institutions in Europe

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Author Info
Daniele Checchi ()
Claudio Lucifora

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Abstract

We investigate the evolution of unionisation, considering both economic and institutional factors.While economists typically study the effects of labour market institutions treating unionisation as given and focusing on rent-seeking motivations, in this paper we study how union membership is itself related to the economic environment and, in particular, to labour market institutions. We argue that, if unions provide insurance against income and/or unemployment risks, government policies aimed at increasing worker security can alter workers' incentives to join unions. The empirical analysis focuses on the evolution of union density in 14 European countries over the post-War period. The traditional view of unions as coalitions of workers engaged in rent-seeking activities is analysed and contrasted with the complementary view that unions and labour market institutions provide (second best) protection against uninsurable labour market risks. Results suggest that rent sharing behaviour is weakly related to aggregate unionisation patterns, while economic shocks and labour market institutions appear to be more relevant in explaining cross-country differences in unionisation patterns. Institutions such as employment protection legislation, wage indexation, statutory minimum wages appear to crowd out unions, while institutional features that make it easier for unions to function (such as workplace representation and centralised wage bargaining) are empirically associated with higher unionisation. In the context of the ongoing debate on flexibility-oriented reforms and evolving European institutions - such as the European Monetary Union (EMU), the European Social Charter (ESC) and more generally the system of welfare provisions - the results in this paper offer implications both for the design of European institutions as well as for future of trade unions in Europe.

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Paper provided by Department of Economics University of Milan Italy in its series Departemental Working Papers with number 2002-16.

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Date of creation: 01 Jan 2002
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Handle: RePEc:mil:wpdepa:2002-16

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Related research
Keywords: trade unions; labour market institutions; membership;

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This paper has been announced in the following NEP Reports: References listed on IDEAS
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  20. Burda, Michael C, 1990. "Membership, Seniority and Wage-Setting in Democratic Labour Unions," Economica, London School of Economics and Political Science, vol. 57(228), pages 455-66, November. [Downloadable!] (restricted)
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  25. Richard B. Freeman, 1986. "Unionism Comes to the Public Sector," NBER Working Papers 1452, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  26. Holmlund, Bertil & Lundborg, Per, 1999. "Wage bargaining, union membership, and the organization of unemployment insurance," Labour Economics, Elsevier, vol. 6(3), pages 397-415, September. [Downloadable!] (restricted)
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  28. Carruth, Alan A & Disney, Richard F, 1988. "Where Have Two Million Trade Union Members Gone?," Economica, London School of Economics and Political Science, vol. 55(217), pages 1-19, February. [Downloadable!] (restricted)
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  1. Rannenberg, Ansgar, 2008. "Disinflation and the NAIRU in a New-Keynesian New-Growth Model," MPRA Paper 9346, University Library of Munich, Germany. [Downloadable!]
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  2. Ansgar, Rannenberg, 2009. "Disinflation and the NAIRU in a New-Keynesian New-Growth Model (Extended Version)," MPRA Paper 13610, University Library of Munich, Germany. [Downloadable!]
  3. MORICONI, Simone & SATO, Yasuhiro, 2006. "International commodity taxation in the presence of unemployment," CORE Discussion Papers 2006069, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
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  4. Floro Ernesto Caroleo & Gianluigi Coppola, 2006. "The Impact of the Institutions on Regional Unemployment Disparities in Europe," Discussion Papers 4_2006, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy. [Downloadable!]
  5. Laszlo Goerke & Markus Pannenberg, 2007. "Trade Union Membership and Works Councils in West Germany," IZA Discussion Papers 2635, Institute for the Study of Labor (IZA). [Downloadable!]
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  6. Christopher A. Pissarides, 2003. "Unemployment in Britain: A European Success Story," CEP Discussion Papers dp0600, Centre for Economic Performance, LSE. [Downloadable!]
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  7. Philip Du Caju & Erwan Gautier & Daphne Momferatou & Melanie Ward-Warmedinger, 2008. "Institutional features of wage bargaining in 23 European countries, the US and Japan," Working Paper Series 974, European Central Bank. [Downloadable!]
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  8. Floro Ernesto Caroleo & Gianluigi Coppola, 2005. "The impact of institutions on Regional unemployment disparities," ERSA conference papers ersa05p758, European Regional Science Association. [Downloadable!]
  9. Juan Duque & Raúl Ramos & Jordi Suriñach, 2006. "Wages and productivity: the role of labour market institutions in OECD countries," Empirica, Springer, vol. 33(4), pages 231-243, September. [Downloadable!] (restricted)
  10. Erkki Koskela & Roope Uusitalo, 2003. "The Un-Intended Convergence: How the Finnish Unemployment Reached the European Level," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  11. Céline Choulet, 2004. "Public employment and labour market performance : centralization wage setting effects," Cahiers de la Maison des Sciences Economiques v04036, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
  12. Wolfgang Ochel, 2005. "Concepts and Measurement of Labour Market Institutions," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 3(4), pages 40-55, 01. [Downloadable!]
  13. Petri Böckerman & Roope Uusitalo, 2005. "Union membership and the erosion of the Ghent system: Lessons from Finland," Labor and Demography 0508008, EconWPA. [Downloadable!]
  14. Tvrdon, Michal, 2007. "Labour Market Flexibility: the Case of Visegrad Countries," MPRA Paper 12314, University Library of Munich, Germany. [Downloadable!]
  15. van Ours, Jan C., 2003. "Has the Dutch Miracle Come to an End?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  16. William Milberg & Ellen Houston, 2005. "The high road and the low road to international competitiveness: Extending the neo-Schumpeterian trade model beyond technology," International Review of Applied Economics, Taylor and Francis Journals, vol. 19(2), pages 137-162, March. [Downloadable!] (restricted)
  17. Ours, J.C. van, 2003. "Has the Dutch miracle come to an end?," Discussion Paper 32, Tilburg University, Center for Economic Research. [Downloadable!]
  18. Juha Kilponen & Pekka Sinko, 2005. "Does Centralised Wage Setting Lead into Higher Taxation," Labor and Demography 0509013, EconWPA. [Downloadable!]
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  19. Schnabel, Claus & Wagner, Joachim, 2005. "Determinants of Union Membership in 18 EU Countries: Evidence from Micro Data, 2002/03," IZA Discussion Papers 1464, Institute for the Study of Labor (IZA). [Downloadable!]
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  20. William Dickens & Lorenz Goette & Erica L. Groshen & Steinar Holden & Julian Messina & Mark Schweitzer & Jarkko Turunen & Melanie Ward, 2007. "How Wages Change: Micro Evidence from the International Wage Flexibility Project," CSEF Working Papers 171, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy. [Downloadable!]
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  21. Pekka Sinko, 2005. "Does Centralised Wage Setting Lead into Higher Taxation?," Labor and Demography 0509007, EconWPA. [Downloadable!]
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