Risk Aversion and Trade‐Union Membership*

Abstract

If trade unions provide only their members with insurance against income variations, as a private good, this insurance will provide a stronger incentive for more risk‐averse employees to become union members. Using data from the German Socio‐Economic Panel (SOEP) and various direct measures of individual risk attitudes, we find robust evidence of a positive relationship between risk aversion and the likelihood of union membership for full‐time employees. This association is particularly strong for males and in West Germany.

Inequality and Union Membership: The Influence of Relative Earnings and Inequality Attitudes

“…Had the ISSP been a panel study following the same individuals over time and with data on individuals entering and exiting union membership (Elias 1996; Visser 2002), we could provide a stronger test. At present, using repeated cross sections, we cannot exclude that worker ability (yielding higher earnings or favouring individualistic behaviour) and risk aversion (leading workers to accept lower wages in exchange for longer contract duration, as well as raising the demand for union protection — see Goerke and Pannenberg (2007)) — may also account for part of our results 15…”

Union Membership and Collective Bargaining: Trends and Determinants

“…One answer is that unions also provide some private goods to their members such as strike pay, legal assistance, employment protection, and insurance against income variations, which act as "selective incentives" for joining a union (Goerke and Pannenberg 2012). The most prominent explanation of union existence probably is that workers comply with a social custom of union membership.…”

Foreign ownership and intra-firm union density in Germany

“…Moreover, in case of a dismissal, union members have a higher probability of receiving severance pay (Goerke and Pannenberg 2010). Finally, Goerke and Pannenberg (2012) find that risk-averse workers are more likely to be union members. This conforms to the notion that unions provide exclusive insurance services to their members.…”