Changes in Union Membership Over Time : A Panel Analysis for West Germany

Despite the apparent stability of the wage bargaining institutions in West Germany, aggregate union membership has been declining dramatically since the early 1990s. However, aggregate gross membership numbers do not distinguish between employment status and it is impossible to disaggregate these sufficiently. This paper uses four waves of the German Socio-economic Panel in 1985, 1989, 1993, and 1998 to perform a panel analysis of net union membership among employees. We estimate a correlated random-effects probit model suggested by Chamberlain (Despite the apparent stability of the wage bargaining institutions in West Germany, aggregate union membership has been declining dramatically since the early 1990s. However, aggregate gross membership numbers do not distinguish between employment status and it is impossible to disaggregate these sufficiently. This paper uses four waves of the German Socio-economic Panel in 1985, 1989, 1993, and 1998 to perform a panel analysis of net union membership among employees. We estimate a correlated random-effects probit model suggested by Chamberlain (Handbook of Econometrics, Vol. II, Amsterdam: Elsevier Science, 1984) to take proper account of individual-specific effects. Our results suggest that at the individual level the propensity to be a union member has not changed considerably over time. Thus, the aggregate decline in membership is due to composition effects. We also use the estimates to predict net union density at the industry level based on the IAB employment subsample for the time period 1985-97