Working Paper: NBER ID: w25924
Authors: Richard Murphy
Abstract: This paper provides evidence for why individuals join unions instead of free-riding. I model membership as legal insurance. To test the model, I use the incidence of news stories concerning allegations against teachers in the UK as a plausibly exogenous shock to demand for such insurance. I find that, for every five stories occurring in a region, teachers are 2.2 percentage points more likely to be members in the subsequent year. These effects are larger when teachers share characteristics with the news story and can explain 45 percent of the growth in teacher union membership between 1992 and 2010.
Keywords: unions; freerider problem; membership; legal insurance; teacher unions
JEL Codes: I20; J45; J51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Perceived risk of allegations (K42) | Decision to join unions (J51) |
| Media coverage of allegations (Z28) | Perceived threat (F52) |
| Characteristics shared with subjects of news stories (Z00) | Demand for union membership (J50) |
| Increased perceived threat (H56) | Growth in teacher union membership (1992-2010) (J50) |
| Media coverage of allegations against teachers (A19) | Union membership (J51) |