Union
membership
and coverage
53
Union membership and
coverage: a study using the
nested multinomial logit
model
Peter Wright
University of Nottingham, Nottingham, UK
Introduction
This article seeks to examine the link between union membership and union
recognition. It considers if an individual’s decision of whether to join a trade
union is conditioned by whether or not there is a union present which is
recognized by the management for the purposes of bargaining. This takes up
Disney’s (1990) criticism of micro-econometric analyses of union membership at
the level of the individual which adopt a single equation specification (see, for
example, Bain and Elias, 1985; Booth, 1986; Cregan and Johnston, 1990; Guest
and Dewe, 1988). He argues that the determinants of union membership should
“be analysed in two stages. At the first stage, there are certain factors which
determine whether there is a recognized union or staff association within the
establishment for the individual to join. Second, there is the question of whether
an individual chooses to join a union which is recognised. This can be termed the
‘determinants of individual membership’, conditioned on coverage” (Disney,
1990, p. 171). The solution to this problem suggested by Disney (1990), and the
approach adopted in the articles of both Green (1990) and Wright (1994), is to use
a bivariate probit model in order that union membership and coverage can be
modelled jointly. Both Green (1990) and Wright (1994) find that unconditioned
estimates appear to be considerably biased in relation to the conditioned model.
While both these articles provide coherent and well-defined explanations of
union recognition and individual union membership, they do not explicitly
model the utility maximizing response of the individuals concerned. This article
examines the link between coverage and individual union membership using a
different econometric framework – the nested multinomial logit model (NMNL).
Modelling individual decisions
The nested multinomial logit model
The dominant method of analysing the determinants of individual union
membership is the univariate probit model. More recently, the bivariate probit
model has been used to model whether an individual is in a covered institution
and whether the individual is a member of a union jointly by allowing the error
terms in the membership and coverage equations to have a bivariate normal
distribution. Having obtained the joint density of individual membership and
International Journal of Manpower,
Vol. 16 No. 2, 1995, pp. 53-59.
MCB University Press,
0143-7720