Institutions, Incentives and Trade Union Membership

The study investigates the determinants of unionization in a country — Finland — where union density, defined as the number of unionized members divided by the labour force, has risen 60 percentage points in 32 years, from 22 percent in 1960 to 82 percent in 1992. The theoretical framework of the study is based on the background information obtained from surveys inquiring why individuals join a union. The empirical analysis for the period 1962–92 shows that the model is capable of explaining long-run trends in union density in a very satisfactory manner. The results imply that institutional features of the labour market, characterized by the benefit mark-up variable and a dummy variable cap…