Why Unions Survive: Understanding How Unions Overcome The Free-Rider Problem
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.
I thank Sandy Black, Alex Bryson, Justin Gallagher, Claudia Hupkau, Steve Machin, Brendon McConnell, Emma Pickering, Imran Rasul, Felix Weinhardt, as well as the participants of the CEP Labour Workshop, CESifo Education Group, Lancaster University, UT Austin and UC Irvine. All remaining errors are my own. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
Richard Murphy, 2020. "Why Unions Survive: Understanding How Unions Overcome the Free-Rider Problem," Journal of Labor Economics, vol 38(4), pages 1141-1188.