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Trade Union Membership and Dismissals

  • Laszlo Goerke
  • Markus Pannenberg

In Germany, there is no trade union membership wage premium, while the membership fee amounts to 1% of the gross wage. Therefore, prima facie, there are strong incentives to free-ride on the benefits of trade unionism. We establish empirical evidence for a private gain from trade union membership which has hitherto not been documented: in West Germany, union members are less likely to lose their jobs than non-members. In particular, using data from the German Socio-Economic Panel we can show that roughly 50% of the observed raw differential in individual dismissal rates can be explained by the estimated average partial effect of union membership.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3196.

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Date of creation: 2010
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Handle: RePEc:ces:ceswps:_3196
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