Trade Union Membership and Dismissals
34 Pages Posted: 8 Oct 2010
Date Written: September 30, 2010
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.
Keywords: dismissal, free-riding, trade union membership, survey data
JEL Classification: C23, H41, J51, J63
Suggested Citation: Suggested Citation