Does union membership increase job security? Evidence from British panel data

Abstract

Why do workers join Union? Union wages are available to all workers, regardless of their Union membership status. Recent literature stressed the role of Unions in providing excludable employment security to their members, by enforcing higher firing cost. Using BHPS panel data, we’ll test the hypotheses that: i) Union Membership reduces involuntary layoff/dismissal; ii) Union Members increase the probability and the amount of a severance payment upon dismissal.I found that Union Membership reduced firing probability by 50% (from 7 to 3.5%) and increases received severance pay by roughly two month of pre-displacement wage.