Wage bargaining, union membership, and the organization of unemployment insurance

The paper offers a theoretical analysis of a labor market institution known as the Gent system, which is a system where unions run unemployment insurance (UI) through government-subsidized UI funds. This system is practiced in four Nordic countries with comparatively very high unionization rates. Th...

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Bibliographic Details
Published in:Labour economics 1999, Vol.6 (3), p.397-415
Main Authors: Holmlund, Bertil, Lundborg, Per
Format: Article
Language:English
Subjects:
Unemployment insurance
Union membership
Wage bargaining
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Summary:The paper offers a theoretical analysis of a labor market institution known as the Gent system, which is a system where unions run unemployment insurance (UI) through government-subsidized UI funds. This system is practiced in four Nordic countries with comparatively very high unionization rates. The analysis shows that the Gent system is more conducive to unionization than a compulsory UI system if the Gent system is heavily subsidized by the government or if workers are strongly risk averse. Moreover, a rise in the share of benefits financed by union members is likely to reduce wages as well as union membership.
ISSN:0927-5371
1879-1034
DOI:10.1016/S0927-5371(99)00010-X