Unions and labour market institutions in Europe

Abstract:

We study the evolution of union density in 14 European countries over the postwar period in light of theoretical rationales for union membership. Unions offer not only wage bargaining strength, but also protection against uninsurable labour market risks, and similar protection may also be offered by labour market institutions. Empirically, such institutions as job security legislation and wage indexation do appear to crowd out unions. Conversely, institutional features that make it easier for unions to function (such as workplace representation and centralised wage bargaining) are empirically associated with higher unionisation.

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