The Determinants of Trade Union Density in Cross-Country Comparisons: Theortical Opulance and Empirical Destitution Bernd Brandl University of Vienna Department

The Determinants of Trade Union Density in Cross-Country Comparisons:Theortical Opulance and Empirical Destitution

Bernd Brandl

University of Vienna

Department of Industrial Sociology

1st TURI network Conference:

The future of trade union structures and strategies

October 2008 1st TURI network Conference 2

• Researcher offer a number of determinants which possibly explain differences in the level of trade union density across countries and shifts over time

• From a macro-perspective (socio-)economic, political and institutional factors are used to explain differences in trade union density across countries and over time

• Empirical studies (usually) use aggregate pooled time series to investigate the empirical relevance of determinants on basis of different models

• Results of empirical studies are ‘mixed’ regarding the relevance of specific determinants

Introductory remarks and motivation


• The heterogeneity in empirical results is unsatisfactory for researchers and ‘policy makers’ as there is uncertainty about what determinants are ‘really’ important

The aim of this paper is to investigate systematically the empirical ‘relevance’ of determinants in explaining variations of trade union density across countries and over time using a Bayesian Model Averaging approach

The work allows the identification of variables that are robust in explaining trade union density, i.e. provide explanatory power independent of what (specific) theory or model is used!

Introductory remarks and motivation


Contents

I. Determinants of trade union density

II. The empirical relevance of determinants and model uncertainty

III. Bayesian Model Averaging and robust determinants

IV. Summary and conclusions




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AU

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AU

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BE

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CA

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DK

FIN

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ITA

JAP

NL

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NO

R PT

ES

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SW

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SU

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UK

US

• Trade union density: A country comparisonAverages from 1970 to 2000.

Source: OECD



AUT

BEL

BRD

DK

ITA

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• Trade union density: A country comparisonShifts over time from 1970 to 2000.

Source: OECD


• Literature is rich in offering theories and models that explain trade union density (across countries and in time)

• Literature is also reach in specifying determinants (factors, variables) that explain differences in trade union membership across countries and changes over time:

• Institutional determinants (number of union trade unions, organization of trade unions ...)

• Economic determinants (unemployment rate, business cycle …)

• Socio-economic determinants (demographic characteristics, structure of the economy, education of population, religion …)

• Political determinants (Corporatism, political orientation of government …)



• Analyzed variables in cross-country studies


Table 1: Regressors used in empirical cross-country studies on union density Variable Lag Union Density Level Union Density change Description and notes Union Density t-1 Oskarsson (2003a), Checchi

and Visser (2005), Booth (1983)*

Lange and Scruggs (2002), Visser (2002), Calmfors et al (2001), Western (1997)

One period lagged union density.

Union Density Start

t Calmfors et al (2001) Ebbinghaus and Visser (1999), Calmfors et al (2001)

Union density level at the beginning of the period under investigation. Control for differences in the level. Note that Calmfors et al (2001) only consider cross section data so that Union Density Start serves as a control variable for differences in levels across countries.

Unemployment t Oskarsson (2003a), Checchi and Visser (2005), Checchi and Nunziata (2004), Booth (1983)*, Checchi and Lucifora (2002), Traxler et al (2001), Neumann and Rissman (1984)*, Moore et al (1989)*

Blaschke (2000) Unemployment rate defined as the percentage of the civilian labor force unemployed.

Unemployment t-1 Neumann and Rissman (1984)*, Moore et al (1989)*

Calmfors et al (2001) Unemployment Rate, commonly used definitions. OECD Economic Outlook.

Unemployment t-2 Neumann and Rissman (1984)*, Moore et al (1989)*

Visser (2002) Two period lagged unemployment rate (see also variable Unemployment).

Change Unemployment

t Oskarsson (2003a), Oskarsson (2002)

Blaschke (2000), Calmfors et al (2001), Western (1997)

Period change in Variable Unemployment, i.e. unemployment rate (see also variable Unemployment).

Change Unemployment

t-1 Checchi and Visser (2005) Lange and Scruggs (2002), Visser (2002), Calmfors et al (2001)

One period lagged period change in Variable Unemployment, i.e. unemployment rate (see also variable Unemployment).

Change Unemployment

t-2 Checchi and Visser (2005) Two periods lagged period change in Variable Unemployment, i.e. unemployment rate (see also variable Unemployment).

Standard Deviation Unemployment

t-1 Checchi and Visser (2005) One period lagged standard deviation of the unemployment rate (see also variable Unemployment). Checchi and Visser (2005) use the 3-year moving average standard deviations for unemployment as proxy for job insecurity.




Table 1 (Continued): Regressors used in empirical cross-country studies on union density Variable Lag Union Density Level Union Density change Description and notes Employment t-1 Calmfors et al (2001) One period lagged Employment/population ratio. Change Employment

t Checchi and Visser (2005), Neumann and Rissman (1984)*, Moore et al (1989)*

Visser (2002), Calmfors et al (2001)

Period change in Employment/population ratio. Note that Neumann and Rissman (1984) and Moore et al (1989) do not use the change in the ratio but the period change in total employment.

Change Employment

t-1 Neumann and Rissman (1984)*, Moore et al (1989)*

Calmfors et al (2001) One period lagged period change in Employment/population ratio (see also variable Employment).

Change Employment


Two period lagged period change in Employment/population ratio (see also variable Employment).

Change Employment


Three period lagged period change in Employment/population ratio (see also variable Employment).

Change Self Employment

t Calmfors et al (2001) Period change of the self-employment share in total employment.

Change Monopoly Employment

t Calmfors et al (2001) Period change in the employment share of ‘natural monopolies’ (energy-gas-water-transport-telecommunications) in dependent employment.

Change Temporary Employment

t Calmfors et al (2001) Period change in share of temporary workers in dependent employment.

Change Share Youth Employment

t Calmfors et al (2001) Period change in share of dependent employment below the age of 35.

Change Female Employment

t Calmfors et al (2001) Period change in the female share of dependent employment.

Employment Manufacturing

t Traxler et al (2001) Share of employees in manufacturing in the total number of employees.




Table 1 (Continued): Regressors used in empirical cross-country studies on union density Variable Lag Union Density Level Union Density change Description and notes Employment Public Sector

t Oskarsson (2003a), Checchi and Visser (2005), Checchi and Lucifora (2002), Traxler et al (2001)

Share of public employment in total dependent employment. Note that for example Oskarsson (2003a) defines public employment as the share of the civilian labor force employed in the government service sector. Checchi and Visser (2005) define public employment as the share of governmental employment in total dependent employment.

Employment Public Sector

t-1 Visser (2002) One period lagged share of public employment (see also variable Employment Public Sector).

Change Employment Public Sector


Calmfors et al (2001) Period change in the share of public employment (see also variable Employment Public Sector).

Change Employment Public Sector

t-1 Checchi and Visser (2005) Lange and Scruggs (2002), Blaschke (2000), Traxler et al (2001)

One period lagged period change in the share of public employment (see also variable Employment Public Sector).

Employment Service Sector

t Oskarsson (2003a) Size of the service sector, i.e. the percentage of the civilian labour force employed in the service sector compared to total labour force.

Change Employment Service Sector


Period change of the size of the service sector (see also variable Employment Service Sector).

Change Employment Service Sector

t-1 Lange and Scruggs (2002) One period lagged period change of the size of the service sector (see also variable Employment Service Sector).

Logarithm Labour Force

t Oskarsson (2003a), Traxler et al (2001)

Logarithm of size of the labour force. Operationalized and transformed by Traxler at al (2001) by the logarithm of dependent employment and by Oskarsson (2003a) as wage and salary earners plus unemployed workers.

Change Logarithm Labour Force

t-1 Oskarsson (2003a), Oskarsson (2002)

Lange and Scruggs (2002) One period lagged change of the logarithm of the size of labour force (see also variable Logarithm Labour Force).

Inflation t Oskarsson (2003a), Checchi and Visser (2005), Booth (1983)*, Checchi and Lucifora (2002), Neumann and Rissman (1984)*, Moore et al (1989)*

Inflation defined as the period percentage change in the consumer price index.




Table 1 (Continued): Regressors used in empirical cross-country studies on union density Variable Lag Union Density Level Union Density change Description and notes Change Inflation t Oskarsson (2003a),

Oskarsson (2002), Checchi and Visser (2005)

Visser (2002), Blaschke (2000), Traxler et al (2001), Calmfors et al (2001)

Period change in the period percentage change in the consumer price index (see also variable Inflation).

Standard Deviation Inflation

t Checchi and Visser (2005) Standard deviation of period percentage changes in the consumer price index (see also variable Inflation). Checchi and Visser (2005) use the 3-year moving average standard deviations for inflation as proxy for income insecurity

Government Partisanship

t Ebbinghaus and Visser (1999), Oskarsson (2003a), Neumann and Rissman (1984)*, Moore et al (1989)*

Western (1997) Government partisanship as an indicator of a pro-union political environment. Note that different operationalizations are used: Oskarsson (2003) uses annual averages of left party cabinet portfolios as a percent of total; Checchi and Visser (2005) use left party votes as a percent of total votes (obtained from Mackie and Rose (1974) and subsequent extension by Duan Swank); Western (1997) uses the proportion of cabinet seats held by labor, social democratic, and communist parties (obtained from Keesing’s Contemporary Archives); Neumann and Rissman (1984) and Moore et al (1989) use the share of Democrats in the US House of Representatives. Ebbinghaus and Visser (1999) mention government partisanship to be important (operationalized by the strength of Social-Democratic and Labour Party participation in government coalitions, similar to Merkel, 1993) but do not include this variable in the regression specification.

Change Government Partisanship

t Oskarsson (2003a), Oskarsson (2002), Checchi and Visser (2005)

Period change in government partisanship (see also variable Government Partisanship).

Change Government Partisanship

t-1 Lange and Scruggs (2002) One period lagged period change in government partisanship (see also variable Government Partisanship).

Trade Openness t Checchi and Lucifora (2002)

Blaschke (2000) Exposedness of economies to international trade, i.e. exports and imports over gross domestic product [(imports + exports)/GDP].

Change Trade Openness

t Checchi and Visser (2005) Period change in the exposedness of economies to international trade (see also variable Trade Openness).




Table 1 (Continued): Regressors used in empirical cross-country studies on union density Variable Lag Union Density Level Union Density change Description and notes Change Logarithm of Trade Openness

t-1 Lange and Scruggs (2002) One period lagged logarithm of variable Trade Openness (see also variable Trade Openness).

Financial Openness

t Oskarsson (2003a), Checchi and Visser (2005)

Blaschke (2000) Exposedness of economies to international financial markets. Operationalized different: For example Oskarsson (2003a) and Blaschke (200) use a weighted index (0 to 100) of the absence of national and international agreement restrictions on the movement of payments and receipt on goods and invisibles and on capital; both use the Quinn index of general financial openness (variable is also called ‘financial deregulation’), see Quinn and Inclan (1997); Checchi and Visser (2005) use a qualitative measure of financial liberalisation (i.e. capital controls).

Change Financial Openness


Period change in exposedness to international financial markets (see also variable Financial Openness).

Change Financial Openness

t-1 Lange and Scruggs (2002) One period lagged period change in exposedness to international financial markets. Lange and Scruggs (2002) define financial openness as capital account openness and use Quinn’s general financial openness index (see also variable Financial Openness).

Foreign Direct Investment

t Oskarsson (2003a) Net foreign direct investment.

Change Foreign Direct Investment


Period change of net foreign direct investment.

Change Foreign Direct Investment

t-1 Lange and Scruggs (2002) One period lagged period change of total foreign direct investment. Note that definition of Lange and Scruggs (2002) differs from that of Oskarson (2003a) and Oskarsson (2002) who uses net instead of total foreign direct investment.

Ghent t Oskarsson (2003b), Ebbinghaus and Visser (1999), Checchi and Lucifora (2002), Traxler et al (2001), Calmfors et al (2001)

Ebbinghaus and Visser (1999), Blaschke (2000), Traxler et al (2001), Calmfors et al (2001)

Dummy for Ghent countries. Usually countries with union-managed unemployment schemes, i.e. Ghent countries, are defined as 1. Usually Ghent countries are: Belgium, Sweden, Denmark and Finland. Oskarsson (2003b) excludes Belgium.




Table 1 (Continued): Regressors used in empirical cross-country studies on union density Variable Lag Union Density Level Union Density change Description and notes Centralization (bargaining)

t Oskarsson (2003b), Checchi and Nunziata (2004), Checchi and Visser (2005), Checchi and Lucifora (2002)

Visser (2002), Degree of centralization of wage bargaining. Note that Oskarsson (2003b) defines centralizaton as wage-setting coordination according to Kenworthy (2001). The measure of Oskarsson (2003b) indicates on a five-point scale the predominant level at which collective bargaining takes place and presence of pattern-setting procedures and government involvment in the process ranging from 1 (fragmented wage bargaining) to 5 (centralized bargaining by confederations with a peace obligation). For Portugal, Greece and Spain operationalization from Ebbinghaus and Visser (1999) are used. For example, Checchi and Visser (2005) create a measure of centralization of wage bargaining that combines information about the degree of centralization in wage bargaining and wage coordination across the main unions, as described in Calmfors et al (2001).

Decentralizitation Date

t Western (1997) Dummy variable indicating the year of decentralization of collective bargaining.

Local Access t Oskarsson (2003b), Checchi and Visser (2005), Ebbinghaus and Visser (1999), Checchi and Lucifora (2002), Calmfors et al (2001)

Visser (2002), Ebbinghaus and Visser (1999), Calmfors et al (2001)

Union workplace access, i.e. the local organizational capacity of the union movements. Measure of institutionalized workplaces access for unions across countries (0 = weak access, 1 = established union presence at the shopfloor). Oskarsson (2003b) and Ebbinhaus and Visser (1999) consider a middle category (0.5) which captures countries where either employee representation through work councils is formally separated from the union but in many cases dominated by it or workplace representation through the union channel and related information and consultation rights. Calmfors et al (2001) distinguish two different variables (dummies) for strong and weak local access.

Statutory Work Council

t Blaschke (2000) Dummy variable for the existence or absence of statutory work councils.

Statutory Employee Representation

t Blaschke (2000) Dummy variable for the existence of statutory employee representation.




Table 1 (Continued): Regressors used in empirical cross-country studies on union density Variable Lag Union Density Level Union Density change Description and notes Strike Volume t Checchi and Visser (2005),

Checchi and Nunziata (2004)

Blaschke (2000) Strike volume. Blaschke (2000) operationalizes strike volume by working days lost per employee. Checchi and Visser (2005) as strike participation given by the ration of workers involved in strikes per dependent employees and Checchi and Nunziata (2004) as proportion of total employment.

Strike Volume t-1 Visser (2002) One period lagged strike volume (see also variable Strike Volume). Change Strike Volume

t Checchi and Visser (2005) Calmfors et al (2001), Western (1997)

Period change of strike volume. Note that for example Calmfors et al (2001) define strike volume as ratio between strikers and employees (see also variable Strike Volume).

Replacement Rate t Checchi and Visser (2005), Checchi and Nunziata (2004), Checchi and Lucifora (2002)

Visser (2002) Replacement rate. Measures the replacement rate, i.e. the ratio between unemployment benefits and average wages. Created by taking a weighed average of the earnings of an average production worker wage and two-thirds of it.

Replacement Rate t-1 Checchi and Visser (2005) Visser (2002) On period lagged replacement rate (see also variable Replacement Rate).

Change Replacement Rate

t Calmfors et al (2001) Period change of the replacement rate (see also variable Replacement Rate).

Benefit Duration t Checchi and Nunziata (2004), Checchi and Lucifora (2002)

Benefit duration, i.e. duration of replacement benefit receives.

Total Replacement Benefits

t Checchi and Nunziata (2004)

Total replacement benefits. Replacement rate multiplied by benefit duration, i.e. replacement rate * benefit duration (see also variables Replacement Rate and Benefit Duration).

Wage Indexation t Checchi and Visser (2005), Checchi and Lucifora (2002)

Wage indexation. Dummy variable indicating the existence of wage indexation clauses.

Logarithm Labor Costs


Logarithm of labor costs.

Employment Protection

t Checchi and Nunziata (2004), Checchi and Lucifora (2002)

Employment protection index; taken from Blanchard and Wolfers (2000).

Product Market Regulation

t Checchi and Lucifora (2002)

Index of the existence and restrictiveness of product market regulations.

Education t Checchi and Nunziata (2004)

Education. Operationalized as average years of education in population older than 25.




Table 1 (Continued): Regressors used in empirical cross-country studies on union density Variable Lag Union Density Level Union Density change Description and notes Change Education t Calfmors et al (2001) Period change in education. Defined by Calmfors et al (2001) by the

population share with secondary or college degree (note that operationalization of Calmfors et al (2001) differs to that of Checchi and Nunziata (2004)).

Change GDP Growth

t-1 Lange and Scruggs (1998) Used in a working paper from 1998. Not considered in the published 2002 paper. One period lagged period change of gross domestic product, i.e. change of economic growth.

Institutionalization Index LS

t Lange and Scruggs (2002) Institutionalization index which is constructed on basis of components: Centralization (bargaining level), corporatism, Ghent and Local (workplace) access. All components are scaled between 0 and 1 and the index is constructed as an additive combination. Note that Lange and Scruggs (2002) exclude Belgium as Ghent country, corporatism is taken from Lijphart and Crepaz (1991) and the centralization of wage bargaining from Golden, Wallerstein and Lange (1996), (see also variables Ghent, Local Access, Centralization and Corporatism) Achtung: geht eigentlich nicht als eigene Variable ein – sondern immer nur in Interaktion mit anderen Variablen (siehe Interaktion).

Wage Share t Checchi and Lucifora (2002)

Wage share on value added (private sector).

Change Nominal Wages

t Booth (1983)* Period change of nominal wages.

Change Real Wages

t Blaschke (2000) Period change of real wage.

Corporatism t Ebbinghaus and Visser (1999)

Degree of corporatism operationalized categorization between high corporatist systems and consociational democracies and between countries. Note that this definition differs from that of Lange and Scruggs (2002), see also variable Institutionalization Index LS.

Closed Shop Practice

t Ebbinghaus and Visser (1999), Calmfors et al (2001)

Ebbinghaus and Visser (1999), Blaschke (2000)

Presence or absence of closed shop practices.




Table 1 (Continued): Regressors used in empirical cross-country studies on union density Variable Lag Union Density Level Union Density change Description and notes Closed Shop Single Employer Bargaining

t Blaschke (2000) Closed shop practice with single employer bargaining (see also variable Closed Shop Practice).

Closed Shop Multi Employer Bargaining

t Traxler et al (2001) Blaschke (2000) Closed shop practice with multi employer bargaining (see also variable Closed Shop Practice).

Extension Practice t Checchi and Lucifora (2002)

Mandatory extension of collective agreements.

Number Unions t Blaschke (2000) Number of unions that exist in a country. Concentration Unions

t Checchi and Lucifora (2002)

Measure of the concentration of unions. Checchi and Lucifora (2002) use the Herfindahl Index on basis of 6 major unions.

Governability Unions

t Blaschke (2000) Governability of the largest union confederation.

Kaitz Index t Checchi and Lucifora (2002)

Ratio between minimum wages and average wages.

Tax Wedge t Checchi and Lucifora (2002)

Sum of the employment tax rate, i.e. the direct tax rate and the indirect tax rate.

Participation policy-making

t Blaschke (2000) Activities of the larges union confederation in socio-economic policy-making. Achtung, von Blaschke (2000) nur erwähnt und eigentlich gesagt, dass es in die Regression aufgenommen wird. Findet sich dann aber nicht in Regression!

Extension Practice plus Statutory Work Council

t Blaschke (2000) Dummy variable for countries with pervasive Extension Practice and Statutory Work Council.

Extension Practice plus Statutory Employee Representation

t Blaschke (2000) Dummy variable for countries with pervasive Extension Practice and Employee Representation.




Table 1 (Continued): Regressors used in empirical cross-country studies on union density (interaction terms) Variable Lag Union Density Level Union Density change Description and notes Unemployment X Ghent

t-2 Visser (2002) Interaction between two periods lagged variables Unemployment and Ghent.

Change Unemployment X Ghent

t-1 Checchi and Visser (2005) Visser (2002) Interaction between one period lagged variables Change Unemployment and Ghent.

Change Unemployment X Ghent

t-2 Checchi and Visser (2005) Interaction between two periods lagged variables Change Unemployment and Ghent.

Unemployment X Institutionalization Index O

t Oskarsson (2003a) Interaction between variables Unemployment and Institutionalization Index O. Note that the Institutionalization Index used in Oskarsson (2002, 2003a) and denoted by Institutionalization Index O is an index that is constructed from variables Centralization, Local Access and Ghent. The index combines the degree of coordination of the bargaining system, the organizational feature of the union at the local level, and the organization of the unemployment benefit system. Institutionalization Index O = (Centralization * Workplace Access + Ghent) / 2

Change Unemployment X Institutionalization Index O

t Oskarsson (2003a) , Oskarsson (2002)

Interaction between variables Change Unemployment and Institutionalization Index O (see description of Interaction Unemployment with Institutionalization Index O for details on the index).

Inflation X Institutionalization Index O

t Oskarsson (2003a) Interaction between variables Inflation and Institutionalization Index O (see description of Interaction Unemployment with Institutionalization Index O for details on the index).

Change Inflation X Institutionalization Index O


Interaction between variables Change Inflation and Institutionalization Index O (see description of Interaction Unemployment with Institutionalization Index O for details on the index).

Foreign Direct Investment X Institutionalization Index O

t Oskarsson (2003a) Interaction between variables Foreign Direct Investment and Institutionalization Index O (see description of Interaction Unemployment with Institutionalization Index O for details on the index).




Table 1 (Continued): Regressors used in empirical cross-country studies on union density (interaction terms) Variable Lag Union Density Level Union Density change Description and notes Government Partisanship X Institutionalization Index O

t Oskarsson (2003a) Interaction between variables Government Partisanship and Institutionalization Index O (see description of Interaction Unemployment with Institutionalization Index O for details on the index).

Change Government Partisanship X Institutionalization Index O


Interaction between variables Change Government Partisanship and Institutionalization Index O (see description of Interaction Unemployment with Institutionalization Index O for details on the index).

Logarithm Labor Force X Institutionalization Index O

t Oskarsson (2003a) Interaction between variables Logarithm Labor Force and Institutionalization Index O (see description of Interaction Unemployment with Institutionalization Index O for details on the index).

Change Logarithm Labor Force X Institutionalization Index O


Interaction between variables Change Logarithm Labor Force and Institutionalization Index O (see description of Interaction Unemployment with Institutionalization Index O for details on the index).

Employment Service Sector X Institutionalization Index O

t Oskarsson (2003a) Interaction between variables Employment Service Sector and Institutionalization Index O (see description of Interaction Unemployment with Institutionalization Index O for details on the index).

Employment Public Sector X Institutionalization Index O

t Oskarsson (2003a) Interaction between variables Employment Public Sector and Institutionalization Index O (see description of Interaction Unemployment with Institutionalization Index O for details on the index).

Change Employment Public Sector X Institutionalization Index O


Interaction between variables Change Employment Public Sector and Institutionalization Index O (see description of Interaction Unemployment with Institutionalization Index O for details on the index).

Financial Openness X Institutionalization Index O

t Oskarsson (2003a) Interaction between variables Financial Openness and Institutionalization Index O (see description of Interaction Unemployment with Institutionalization Index O for details on the index).




Table 1 (Continued): Regressors used in empirical cross-country studies on union density (interaction terms) Variable Lag Union Density Level Union Density change Description and notes Change Financial Openness X Institutionalization Index O


Interaction between variables Change Financial Openness and Institutionalization Index O (see description of Interaction Unemployment with Institutionalization Index O for details on the index).

Centralization X Local Access

t Oskarsson (2003b) Interaction between variables Centralization and Local Access.

Wage Indexation X Change Inflation

t Checchi and Visser (2005) Visser (2002) Interaction between variables Wage Indexation and Change Inflation.

Wage Indexation X Inflation

t-1 Checchi and Visser (2005) Visser (2002) Interaction between one period lagged variables Wage Indexation and Inflation.

Ghent X Replacement Rate

t Checchi and Visser (2005) Interaction between variables Ghent and Replacement Rate.

Employment Protection X Total Replacement Benefits


Interaction between variables Employment Protection and Total Replacement Benefits.

Institutionalization Index LS X Change Foreign Direct Investment

t-1 Lange and Scruggs (2002) Interaction between variables Institutionalization Index LS and one period lagged Change Foreign Direct Investment. Note that only variable Change Foreign Direct Investment is lagged.

Institutionalization Index LS X Change Financial Openness

t-1 Lange and Scruggs (2002) Interaction between variables Institutionalization Index LS and one period lagged Change Financial Openness. Note that only variable Change Financial Openness is lagged.

Institutionalization Index LS X Change Logarithm of Trade Openness

t-1 Lange and Scruggs (2002) Interaction between variables Institutionalization Index LS and one period lagged Change Logarithm of Trade Openness. Note that only variable Logarithm Change Trade Openness is lagged.

Institutionalization Index LS X Change Government Partisanship

t-1 Lange and Scruggs (2002) Interaction between variables Institutionalization Index LS and one period lagged Change Government Partisanship. Note that only variable change in government partisanship is lagged.




Table1 (Continued): Regressors used in empirical cross-country studies on union density (interaction terms) Variable Lag Union Density Level Union Density change Description and notes Institutionalization Index LS X Change Unemployment

t-1 Lange and Scruggs (2002) Interaction between variables Institutionalization Index LS and one period lagged change in unemployment. Note that only variable change in unemployment is lagged.

Institutionalization Index LS X Change Employment Public Sector

t-1 Lange and Scruggs (2002) Interaction between variables Institutionalization Index LS and one period lagged change public employment. Note that only variable change in public employment is lagged. Eigentlich bei Lange und Scruggs (2002) nicht public employment sondern government employment (siehe vorne).

Institutionalization Index LS X Change Employment Service Sector

t-1 Lange and Scruggs (2002) Interaction between variables Institutionalization Index LS and one period lagged change service sector employment. Note that only variable change in service sector employment is lagged.

Institutionalization Index LS X Change Inflation

t-1 Lange and Scruggs (2002) Interaction between variables Institutionalization Index LS and one period lagged change of inflation. Note that only variable change in inflation is lagged.

Institutionalization Index LS X dependent labor force

t-1 Lange and Scruggs (2002) Interaction between variables Institutionalization Index LS and one period lagged dependent labor force. Note that only variable change in labor force is lagged.

Centralization X Change Foreign Direct Investment

t-1 Lange and Scruggs (2002) Interaction between variables Centralization and one period lagged Change Foreign Direct Investment. Note that only variable Change Foreign Direct Investment is lagged.

Centralization X Change Financial Openness

t-1 Lange and Scruggs (2002) Interaction between variables Centralization and one period lagged Change Financial Openness. Note that only variable Change Financial Openness is lagged.

Centralization X Change Logarithm of Trade Openness

t-1 Lange and Scruggs (2002) Interaction between variables Centralization and one period lagged Change Logarithm of Trade Openness. Note that only variable Logarithm Change Trade Openness is lagged.




Table1 (Continued): Regressors used in empirical cross-country studies on union density (interaction terms) Variable Lag Union Density Level Union Density change Description and notes Centralization X Change Government Partisanship

t-1 Lange and Scruggs (2002) Interaction between variables Centralization and one period lagged Change Government Partisanship. Note that only variable change in government partisanship is lagged.

Centralization X Change Unemployment

t-1 Lange and Scruggs (2002) Interaction between variables Centralization and one period lagged change in unemployment. Note that only variable change in unemployment is lagged.

Centralization X Change Employment Public Sector

t-1 Lange and Scruggs (2002) Interaction between variables Centralization and one period lagged change public employment. Note that only variable change in public employment is lagged. Eigentlich bei Lange und Scruggs (2002) nicht public employment sondern government employment (siehe vorne).

Centralization X Change Employment Service Sector

t-1 Lange and Scruggs (2002) Interaction between variables Centralization and one period lagged change service sector employment. Note that only variable change in service sector employment is lagged.

Centralization X Change Inflation

t-1 Lange and Scruggs (2002) Interaction between variables Centralization and one period lagged change of inflation. Note that only variable change in inflation is lagged.

Centralization X dependent labor force

t-1 Lange and Scruggs (2002) Interaction between variables Centralization and one period lagged dependent labor force. Note that only variable change in labor force is lagged.

Local Access X Change Foreign Direct Investment

t-1 Lange and Scruggs (2002) Interaction between variables Local Access and one period lagged Change Foreign Direct Investment. Note that only variable Change Foreign Direct Investment is lagged.

Local Access X Change Financial Openness

t-1 Lange and Scruggs (2002) Interaction between variables Local Access and one period lagged Change Financial Openness. Note that only variable Change Financial Openness is lagged.

Local Access X Change Logarithm of Trade Openness

t-1 Lange and Scruggs (2002) Interaction between variables Local Access and one period lagged Change Logarithm of Trade Openness. Note that only variable Logarithm Change Trade Openness is lagged.




Table1 (Continued): Regressors used in empirical cross-country studies on union density (interaction terms) Variable Lag Union Density Level Union Density change Description and notes Local Access X Change Government Partisanship

t-1 Lange and Scruggs (2002) Interaction between variables Local Access and one period lagged Change Government Partisanship. Note that only variable change in government partisanship is lagged.

Local Access X Change Unemployment

t-1 Lange and Scruggs (2002) Interaction between variables Local Access and one period lagged change in unemployment. Note that only variable change in unemployment is lagged.

Local Access X Change Employment Public Sector

t-1 Lange and Scruggs (2002) Interaction between variables Local Access and one period lagged change public employment. Note that only variable change in public employment is lagged. Eigentlich bei Lange und Scruggs (2002) nicht public employment sondern government employment (siehe vorne).

Local Access X Change Employment Service Sector

t-1 Lange and Scruggs (2002) Interaction between variables Local Access and one period lagged change service sector employment. Note that only variable change in service sector employment is lagged.

Local Access X Change Inflation

t-1 Lange and Scruggs (2002) Interaction between variables Local Access and one period lagged change of inflation. Note that only variable change in inflation is lagged.

Local Access X dependent labor force

t-1 Lange and Scruggs (2002) Interaction between variables Local Access and one period lagged dependent labor force. Note that only variable change in labor force is lagged.

Corporatism X Change Foreign Direct Investment

t-1 Lange and Scruggs (2002) Interaction between variables Corporatism and one period lagged Change Foreign Direct Investment. Note that only variable Change Foreign Direct Investment is lagged.

Corporatism X Change Financial Openness

t-1 Lange and Scruggs (2002) Interaction between variables Corporatism and one period lagged Change Financial Openness. Note that only variable Change Financial Openness is lagged.

Corporatism X Change Logarithm of Trade Openness

t-1 Lange and Scruggs (2002) Interaction between variables Corporatism and one period lagged Change Logarithm of Trade Openness. Note that only variable Logarithm Change Trade Openness is lagged.




Table1 (Continued): Regressors used in empirical cross-country studies on union density (interaction terms) Variable Lag Union Density Level Union Density change Description and notes Corporatism X Change Government Partisanship

t-1 Lange and Scruggs (2002) Interaction between variables Corporatism and one period lagged Change Government Partisanship. Note that only variable change in government partisanship is lagged.

Corporatism X Change Unemployment

t-1 Lange and Scruggs (2002) Interaction between variables Corporatism and one period lagged change in unemployment. Note that only variable change in unemployment is lagged.

Corporatism X Change Employment Public Sector

t-1 Lange and Scruggs (2002) Interaction between variables Corporatism and one period lagged change public employment. Note that only variable change in public employment is lagged. Eigentlich bei Lange und Scruggs (2002) nicht public employment sondern government employment (siehe vorne).

Corporatism X Change Employment Service Sector

t-1 Lange and Scruggs (2002) Interaction between variables Corporatism and one period lagged change service sector employment. Note that only variable change in service sector employment is lagged.

Corporatism X Change Inflation

t-1 Lange and Scruggs (2002) Interaction between variables Corporatism and one period lagged change of inflation. Note that only variable change in inflation is lagged.

Corporatism X dependent labor force

t-1 Lange and Scruggs (2002) Interaction between variables Corporatism and one period lagged dependent labor force. Note that only variable change in labor force is lagged.

Ghent X Change Foreign Direct Investment

t-1 Lange and Scruggs (2002) Interaction between variables Corporatism and one period lagged Change Foreign Direct Investment. Note that only variable Change Foreign Direct Investment is lagged.

Ghent X Change Financial Openness

t-1 Lange and Scruggs (2002) Interaction between variables Corporatism and one period lagged Change Financial Openness. Note that only variable Change Financial Openness is lagged.

Ghent X Change Logarithm of Trade Openness

t-1 Lange and Scruggs (2002) Interaction between variables Corporatism and one period lagged Change Logarithm of Trade Openness. Note that only variable Logarithm Change Trade Openness is lagged.

Ghent X Change Government Partisanship

t-1 Lange and Scruggs (2002) Interaction between variables Corporatism and one period lagged Change Government Partisanship. Note that only variable change in government partisanship is lagged.




Table1 (Continued): Regressors used in empirical cross-country studies on union density (interaction terms) Variable Lag Union Density Level Union Density change Description and notes Ghent X Change Unemployment

t-1 Lange and Scruggs (2002) Interaction between variables Corporatism and one period lagged change in unemployment. Note that only variable change in unemployment is lagged.

Ghent X Change Employment Public Sector

t-1 Lange and Scruggs (2002) Interaction between variables Corporatism and one period lagged change public employment. Note that only variable change in public employment is lagged. Eigentlich bei Lange und Scruggs (2002) nicht public employment sondern government employment (siehe vorne).

Ghent X Change Employment Service Sector

t-1 Lange and Scruggs (2002) Interaction between variables Corporatism and one period lagged change service sector employment. Note that only variable change in service sector employment is lagged.

Ghent X Change Inflation

t-1 Lange and Scruggs (2002) Interaction between variables Corporatism and one period lagged change of inflation. Note that only variable change in inflation is lagged.

Ghent X dependent labor force

t-1 Lange and Scruggs (2002) Interaction between variables Corporatism and one period lagged dependent labor force. Note that only variable change in labor force is lagged.




76 Variables

+ 67 Interaction terms (variables)

= 143 Regressors

There are much more other variables which are reasonable!

Further lags

Further interactions



• (Usually) theoretical literature offers testable predictions and can used as a basis for empirical studies:

• Unfortunately, not only predictions of theories are differing, but also the results of empirical studies are ‘heterogeneous’.

• One reason for the heterogeneity: Estimation of different models!

• Depending on what combination of regressors the investigator chooses to put into his regression different significant determinants of union density are achieved!


nn Xxxy 2211


• Examples:


Dependent variable: Change in union density

Calmfors et al (2001)

I

Calmfors et al (2001)

II

Checchi and Visser (2005)

I

Checchi and Visser (2005)

II C 0.106680

(0.348839) 0.313640

(0.339971) 0.812317

(0.660030) 0.931881

(0.694890) Ghent 0.930328***

(0.340195) 0.421663

(0.355748) - -

Workplace representation

-0.101296* (0.059227)

-0.133901** (0.057607)

-0.080645 (0.055524)

-0.100765* (0.058282)

Shop -

-0.366546*** (0.101249)

- -

Density level (start) 0.002101 (0.006440)

0.013098* (0.006893)

- -

Change unemployment rate t-1

- - -0.183420* (0.098895)

-0.175566 (0.134202)

Inflation - -

0.576043 (2.050843)

2.082612 (2.125649)

Openess of the economy

- - -0.008793* (0.004947)

-0.010621** (0.005192)

Ghent*change unemployment rate t -1

- - 0.410369*** (0.153656)

0.583382*** (0.155582)

Strike volume - -

822.1967** (412.9410)

1121.725*** (428.1847)

Left parties in parliament

- - 0.003443

(0.002386) 0.005290** (0.002468)

Centralization of wage bargaining

- - -0.035706 (0.030533)

-0.057217* (0.031690)

Change in union density t -1

- - 0.307433*** (0.075711)

-


• A ‘phenomenon’ that can be ‘observed’ in empirical studies:

• One study (based on a specific theoretical model) concludes that a specific variable has no significant influence

• Another study (based on a slightly different specification) concludes that the same variable has a significant positive influence

• Another study (based again on a slightly different specification) concludes that the same variable has a significant negative influence

• Reasons for estimating different models or for the existence of ‘model uncertainty’

• Theories are different (and competing)

• Theory is not precise enough in offering the ‘true’ model so that empirical researchers have to ‘check’ alternative specifications

• Small sample size (number of observations limited) so that a selection has to be made



• Comments on model uncertainty:

• Model uncertainty is pervasive in social science

• There is (almost) no theory in social science that is strong enough to ‘dictate’ a single model specification

“All models are wrong, some are useful” Box (1979)

• The typical case is one in which a number of variables are plausible predictors• The problem is how to decide which specification to use

• Bayesian model averaging is (at least) an interesting approach in this context




• Bayesian Model Averaging (BMA)

• Bayesian statisticians reject idea of a single, true estimate

• Instead: each parameter has a distribution!

• It is not ‘believed’ that any of the models is actually correct – all models are used as proxies for some unknown underlying model

• BMA provides a coherent mechanism for accounting for model uncertainty as probabilities to different possible models are attached

• The idea of BMA is to average across several models instead of selecting one model

• It takes the K variables and runs a regression on all 2K subsets of the K variables, before averaging over all these models



• Bayesian Averaging of Classical Estimates (BACE)

• Sala-i-Martin, Doppelhofer and Miller, AER, 2004

• The BACE approach constructs estimates by averaging weighted OLS coefficients across models

• The weights given to individual regressions have a Bayesian justification similar to the BIC

• Advantages of the BACE approach:

• In contrast to a standard Bayesian approach that requires the specification of a prior distribution for all parameters, BACE requires the specification (assumption) of only one prior hyper-parameter: the expected model size (= 7).

• The interpretation of estimates is straightforward:

the weights applied to different models are proportional to the logarithm of the likelihood function corrected for degrees of freedom.



• Determinants of trade union density – BACE results

• Dependent variable(s):

• Share of trade union members in relation to the total number of employees (i.e. trade union density)

• Yearly percentage change

(Source and definition: OECD)

• Cross-country panel data set (balanced):• OECD countries (Australia, Austria, Belgium, Canada, Denmark, Finland,

France, Germany, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, UK, USA)

• Time: 1970 to 2000 (missing values!)

• 55 (theoretically grounded) variables:• Number of trade unions; strike activity; Ghent-System; participation of unions in

socio-economic policy making; centralization of wage bargaining, unemployment rate, trade openness, …



• Determinants of differences in the level across countries

• Robust determinants - Level (# 15):• Number of union confederations (-)

• Ghent-System (+)

• Inflation (+)

• Union activities in policy-making (+)

• Business activities in policy-making (-)

• Centralisation of bargaining level (-)

• Yearly change of wage and salary earner; Extension practice; Closed/Union shop practice, Bargaining governability, Change of compensation per employee, change of wage rates, change of unit labour costs, change in productivity



• Determinants of trade union density

• Robust Determinants - Change (# 10):• Ghent-System (+)

• Left parties in government (+)

• GDP growth (-)

• Trade openness (-)

• Change in total labour force (-)

• Change in unemployment rate (+)

• Change in productivity (+); Population growth (-), Change employment share (-), one period lagged change in union density (+)




What we already knew!

• Trade union density is different in different countries

• Trade union density is declining in many countries

• There are a lot of theories and studies available which aimed to explain differences in the level of trade union density and the decline over time

• We also knew that some theories and studies are saying this and some are saying that

• I knew that that this is not satisfactory

• at least I have the impression that the current state of research is unsatisfactory because we do not know what to do after reading all these studies



What do we know now?

• We still do not know which theory is the ‘true’ one

• But we know that some theories are explaining trade union density better than other theories

• And there are variables which are robustly and highly correlated with trade union density and there are variables that are not correlated with trade union density

• These variables are of GENERAL relevance (not only specifical)!

• For the problem at hand the paper showed that:• Only 15 variables (out of 55) are robustly ‘correlated’ with the level of union density

• Only 10 variables (out of 55) are robustly ‘correlated’ with the change



What do we know now?

• We still do not know which theory is the ‘true’ one

• But we know that some theories are explaining trade union density better than other theories

• And there are variables which are robustly and highly correlated with trade union density and there are variables that are not correlated with trade union density

• These variables are of GENERAL relevance (not only specifical)!

• For the problem at hand the paper showed that:• Only 15 variables (out of 55) are robustly ‘correlated’ with the level of union density

• Only 10 variables (out of 55) are robustly ‘correlated’ with the change

In fact: Only few determinants are able to explain trade union density

BUT: These few determinants are able to provide us an “instrument” for changing the situation, i.e. ‘policy makers’ (for example trade unions) may use these few variables to increase the number of members in trade unions!

The general relevance allows a very high degree of certainty that something can be changed!



The relevance of these (few) variables for trade unions

• Trade union density (memberships) varies with the business cycle

• Variables: in particular unemployment, inflation and economic growth

hard to ‘use’ as a policy instrument for trade unions

• Trade union density depends on country specific ‘traditions’ (i.e. Ghent system) and on ‘global economic trends’

‘traditions’ and ‘global trends’ are also hard to use a

policy tool (instrument)



The relevance of these (few) variables for trade unions

There are two determinants that might be considered by trade unions to increase their memberships:

• Centralisation of collective bargaining

• Trade unions should bargain collective agreements on the ‘right’ level, i.e. not too central and not too decentralized

• There is an ‘optimal’ level of bargaining in between

• Number of union confederations

• The more ‘united’ and ‘integrated’ unions are the more members they have!

• It is not easy to unify different trade unions because of different traditions

• but it is possible because trade unionists are the ones who are able to

change the situation



FINAL REMARKS

• THERE ARE DEFENITELY NO EASY WAYS (NO EASY INSTRUMENTS) FOR TRADE UNIONS TO INCREASE THEIR MEMBER SHARES

• BUT THERE ARE WAYS!

• The analysis identified ‘ways’ and ‘instruments’ that can be used and which are (extremely) empirically relevant.

• There might be other ‘ways’ (country specific ways) but the two ways identified by this work will work with a high probability!


Documents

The Determinants of Trade Union Density in Cross-Country Comparisons: Theortical Opulance and Empirical Destitution Bernd Brandl University of Vienna Department