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Some Evidence on the Membership Hysteresis Hypothesis in Europe

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  • Burda, Michael C

Abstract

In a democratic model of union wage-setting, monopoly unions can induce hysteresis in the behavior of employment, at least locally. As a result, autoregressive representations of employment and membership should contain a unit root even if the determinants of labor demand are stationary. In addition, the model predicts that employment should Granger-cause consumption wages. These implications are tested with data from several European countries. Although there is little conclusive evidence that employment hysteresis constitutes the key difference between the European and U.S. experiences, trade union membership data from the Federal Republic of Germany provides strong support for the membership hysteresis hypothesis in this country.

Suggested Citation

  • Burda, Michael C, 1990. "Some Evidence on the Membership Hysteresis Hypothesis in Europe," Empirical Economics, Springer, vol. 15(2), pages 143-161.
    • Handle: RePEc:spr:empeco:v:15:y:1990:i:2:p:143-61
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    Cited by:

    1. Franz, Wolfgang, 1995. "Theoretische Ansätze zur Erklärung der Arbeitslosigkeit: Wo stehen wir 1995?," Discussion Papers 27, University of Konstanz, Center for International Labor Economics (CILE).
    2. Fitzenberger, Bernd, 1994. "Zentralisierungsgrad von Lohnverhandlungen und Lohnbildung in Ländern der Europäischen Union," Discussion Papers 20, University of Konstanz, Center for International Labor Economics (CILE).
    3. Magnus Gustavsson & Pär Österholm, 2007. "Does Unemployment Hysteresis Equal Employment Hysteresis?," The Economic Record, The Economic Society of Australia, vol. 83(261), pages 159-173, June.
    4. Daniele Checchi, 2000. "Time series evidence on union densities in European countries," Departmental Working Papers 2000-10, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.

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