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CEP discussion paper
Segmentation, Switching Costs and the Demand for Unionization in Britain
Alex Bryson and Rafael Gomez
May 2003
Paper No' CEPDP0568:
Full Paper (pdf)

JEL Classification: J31; J50;J51

Tags: union membership; switching costs; supply and demand for unionization

This paper explains why some employees who favor unionization fail to join, and why others who wish to abandon union membership continue paying dues. Our explanation is based on a model where employees incur switching (search) costs when attempting to abandon (acquire) union membership. Empirical analysis for Britain confirms one of the main predictions from the switching-cost- model that segmentation in the market for unionization persists even when mandatory membership provisions are eliminated and economy-wide density falls. The importance of these and other empirical findings for both theory and policy are discussed.