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Erosion of the Ghent System and Union Membership Decline: Lessons from Finland

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  • Petri Böckerman
  • Roope Uusitalo

Abstract

Union density declined in Finland by more than 10 percentage points in less than 10 years. This paper analyses the reasons behind the decline, using micro data from the 1990s. According to our results, the changes in the composition of the labour force and the changes in the labour market explain only about a quarter of this decline. The main reason for the decline appears to be the erosion of the Ghent system, due to the emergence of an independent unemployment insurance fund that provides unemployment insurance without requiring union membership. We also find that the decline in the union density can be attributed to the declining inclination of the cohorts born after the early 1960s to become union members. Copyright Blackwell Publishing Ltd/London School of Economics 2006.

Suggested Citation

  • Petri Böckerman & Roope Uusitalo, 2006. "Erosion of the Ghent System and Union Membership Decline: Lessons from Finland," British Journal of Industrial Relations, London School of Economics, vol. 44(2), pages 283-303, June.
  • Handle: RePEc:bla:brjirl:v:44:y:2006:i:2:p:283-303
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    References listed on IDEAS

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    1. Charlwood, Andy, 2003. "The anatomy of union decline in Britain: 1990-1998," LSE Research Online Documents on Economics 20006, London School of Economics and Political Science, LSE Library.
    2. A Charlwood, 2003. "The Anatomy of Union Decline in Britain: 1990-1998," CEP Discussion Papers dp0601, Centre for Economic Performance, LSE.
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    Cited by:

    1. John Schmitt & Alexandra Mitukiewicz, 2012. "Politics matter: changes in unionisation rates in rich countries, 1960–2010," Industrial Relations Journal, Wiley Blackwell, vol. 43(3), pages 260-280, May.
    2. Schnabel Claus & Wagner Joachim, 2008. "The Aging of the Unions in West Germany, 1980–2006," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 228(5-6), pages 497-511, October.
    3. Laszlo Goerke & Markus Pannenberg, 2007. "Trade Union Membership and Works Councils in West Germany," Industrielle Beziehungen - Zeitschrift fuer Arbeit, Organisation und Management - The German Journal of Industrial Relations, Rainer Hampp Verlag, vol. 14(2), pages 154-175.
    4. Petri Böckerman & Seppo Laaksonen & Jari Vainiomäki, 2009. "Micro-level Rigidity vs. Macro-level Flexibility: Lessons from Finland," Working Papers 0972, University of Tampere, School of Management, Economics.
    5. Yuriy Gorodnichenko & Enrique G. Mendoza & Linda L. Tesar, 2012. "The Finnish Great Depression: From Russia with Love," American Economic Review, American Economic Association, vol. 102(4), pages 1619-1644, June.
    6. Petri Bockerman & Erkki Laukkanen, 2009. "Presenteeism in Finland: Determinants By Gender and The Sector of Economy," Ege Academic Review, Ege University Faculty of Economics and Administrative Sciences, vol. 9(3), pages 1007-1016.
    7. Per Skedinger, 2010. "Sweden: A Minimum Wage Model in Need of Modification," Chapters,in: The Minimum Wage Revisited in the Enlarged EU, chapter 12 Edward Elgar Publishing.
    8. Böckerman, Petri & Laaksonen, Seppo & Vainiomäki, Jari, 2006. "Micro-level evidence on wage rigidities in Finland," MPRA Paper 1811, University Library of Munich, Germany.
    9. 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.
    10. David Saha & Ronnie Schöb, 2015. "Unemployment Insurance in Unionized Labor Markets: Neither Ghent nor Centralized," CESifo Working Paper Series 5430, CESifo Group Munich.
    11. Juha Kilponen & Torsten Santavirta, 2010. "New Evidence on Implicit Contracts from Linked Employer-Employee Data," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(4), pages 864-883, December.
    12. Böckerman, Petri & Laukkanen, Erkki, 2008. "What makes you work while you are sick? Evidence from a survey of union members," MPRA Paper 10556, University Library of Munich, Germany.
    13. Erling Barth & Karl O. Moene, 2009. "The Equality Multiplier," NBER Working Papers 15076, National Bureau of Economic Research, Inc.
    14. Petri Böckerman & Roope Uusitalo, 2009. "Minimum Wages and Youth Employment: Evidence from the Finnish Retail Trade Sector," British Journal of Industrial Relations, London School of Economics, vol. 47(2), pages 388-405, June.
    15. Saleem, Zahabia & Donaldson, John A., 2016. "Pathways to poverty reduction," LSE Research Online Documents on Economics 67523, London School of Economics and Political Science, LSE Library.

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