Working Paper: CEPR ID: DP801
Authors: Christoph M. Schmidt; Klaus F. Zimmermann
Abstract: This paper investigates economic determinants and effects of aggregate union membership in the Federal Republic of Germany. We establish that in the long run, high union membership levels coincide not only with a large labour force, but also with a high level of real wages, a small dispersion of wages, and with a relatively large share of aggregate income going to workers. In the short run, union membership dynamics are mainly driven by changes in unemployment. In turn, changes in union membership cause none of the dynamics of other economic aggregates.
Keywords: unions; union membership; centralization; unemployment; cointegration
JEL Codes: E24; J51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| high union membership levels (J51) | large labor force (J21) |
| high union membership levels (J51) | high real wages (J39) |
| high union membership levels (J51) | small wage dispersion (J31) |
| large labor force (J21) | high union membership levels (J51) |
| high unemployment (J64) | high union membership levels (J51) |
| high real wages (J39) | high union membership levels (J51) |
| strong union power (J51) | low profit rate (E25) |
| lower wage spread (J31) | high union membership levels (J51) |
| changes in unemployment (J64) | changes in union membership (J50) |