Risk Aversion and Trade Union Membership

Laszlo Goerke and Markus Pannenberg

No 3351, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: trade union; employment; membership; risk aversion (search for similar items in EconPapers)
JEL-codes: J51 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2008-02
New Economics Papers: this item is included in nep-lab and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published - substantially revised version published as 'Risk Aversion, Collective Bargaining, and Wages in Germany' in: Labour, 2012, 26 (2), 156 - 173

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Related works:
Journal Article: Risk Aversion and Trade‐Union Membership (2012)
Working Paper: Risk Aversion and Trade Union Membership (2008)
Working Paper: Risk Aversion and Trade Union Membership (2008)
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