State substitution of the union good: the case of paid holiday entitlements

Purpose: The literature on the union wage premium is among the most extensive in labour economics but unions’ effects on other aspects of the wage-effort bargain have received much less attention. We contribute to the literature through a study of the union premium in paid holiday entitlements. Design/methodology: We examine the size of the union premium on paid holidays over time, with a particular focus on how the premium was affected by the introduction of a statutory right to paid holidays. Our data come from nationally representative survey s of employees and workplaces. Findings: We find that the union premium on paid holidays is substantially larger than the union premium on wages . However, the premium fell with the introduction of a statutory minimum entitlement to paid leave. Originality/value: Ours is the first study to examine explicitly the interaction between union representation and the law in this setting. Our findings indicate the difficulties that unions have faced in protecting the most vulnerable employees in the UK labour market. We argue that the supplanting of voluntary joint regul ation with statutory regulation is symptomatic of a wider decrease in the regulatory role of unions in the UK