Unemployment and the Demand for Unions
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NBER Working Paper No. 3251
Issued in February 1990
NBER Program(s): LS
Why do people join open-shop unions when they would receive union wage rates even if they were not members? Why are unionization rates so low in the south-east of England? To address these questions, which we treat as interrelated, the paper considers the idea that unions offer insurance against victimization and arbitrary dismissal. Consistent with our theoretical approach, we find that union density is greatest, ceteris paribus, within establishments in areas of high unemployment.
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