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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.

Suggested Citation

  • Laszlo Goerke & Markus Pannenberg, 2008. "Risk Aversion and Trade Union Membership," Discussion Papers of DIW Berlin 770, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp770
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    2. Fitzenberger Bernd & Sommerfeld Katrin, 2016. "A Sequential Decomposition of the Drop in Collective Bargaining Coverage," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 236(1), pages 37-69, February.
    3. Jörg Schwiebert, 2016. "Comparing marginal effects between different models and/or samples," Economics Bulletin, AccessEcon, vol. 36(4), pages 2324-2332.
    4. Pfeifer, Christian, 2008. "A Note on Risk Aversion and Labour Market Outcomes: Further Evidence from German Survey Data," IZA Discussion Papers 3523, Institute of Labor Economics (IZA).
    5. Susi Stoermer, 2010. "Individual Characteristics of Work Council Members – Empirical Evidence," management revue - Socio-Economic Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 21(3), pages 244-262.
    6. Park, Youngkyun & Banerjee, Sudipto, 2020. "Coworker influence on annuitization decisions: Evidence from defined benefit plans," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 582-606.
    7. 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.
    8. 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.
    9. Goerke, Laszlo & Pannenberg, Markus, 2015. "Trade union membership and sickness absence: Evidence from a sick pay reform," Labour Economics, Elsevier, vol. 33(C), pages 13-25.
    10. SeEun Jung, 2017. "The gender wage gap and sample selection via risk attitudes," International Journal of Manpower, Emerald Group Publishing, vol. 38(2), pages 318-335, May.
    11. Jung, SeEun & Choe, Chung & Oaxaca, Ronald L., 2018. "Gender wage gaps and risky vs. secure employment: An experimental analysis," Labour Economics, Elsevier, vol. 52(C), pages 112-121.
    12. 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.
    13. 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(1), pages 1-24, February.
    14. Shelly Lundberg, 2012. "Personality and marital surplus," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-21, December.
    15. Uwe Jirjahn, 2015. "Research on Trade Unions and Collective Bargaining in Germany: The Contribution of Labor Economics," Research Papers in Economics 2015-10, University of Trier, Department of Economics.
    16. Karlsson, Tobias & Stanfors, Maria, 2016. "To be or not to be? Risk attitudes and gender differences in union membership," Lund Papers in Economic History 144, Lund University, Department of Economic History.
    17. Laszlo Goerke, 2020. "Unions and Workers' Well-being," IAAEU Discussion Papers 202008, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).

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    More about this item

    Keywords

    Employment; membership; risk aversion; trade union;
    All these keywords.

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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