Unemployment, Real Wages and Union Membership

This paper investigates economic determinants and effects of aggregate union membership in the Federal Republic of Germany. We establish that in the long run, high union membership levels coincide not only with a large labour force, but also with a high level of real wages, a small dispersion of wages, and with a relatively large share of aggregate income going to workers. In the short run, union membership dynamics are mainly driven by changes in unemployment. In turn, changes in union membership cause none of the dynamics of other economic aggregates.Centralization; Cointegration; Unemployment; Union Membership; Unions