Risk Aversion and Trade Union Membership

Laszlo Goerke () and Markus Pannenberg

No 770, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

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.

Keywords: Employment; membership; risk aversion; trade union (search for similar items in EconPapers)
JEL-codes: J51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab and nep-upt
Date: Written 2008
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Related works:
Working Paper: Risk Aversion and Trade Union Membership (2008)
Working Paper: Risk Aversion and Trade Union Membership (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:diw:diwwpp:dp770

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