Abstract
AbstractThis paper investigates the determinants of trade union membership in Australia using the Engle and Granger (1987) theory of co‐integrated economic variables. Applying the theory of co‐integration yields a model of union membership which can be interpreted as distinguishing between long‐run and ‘business cycle’ determinants of union membership. The principal long‐run determinant of union membership is found to be the level of employment disaggregated by industry classification. Business cycle variables—the real wage and the change in unemployment—are also shown to influence movements in union density. These findings are consistent with recent studies which have attributed the decline in union membership in Australia since the early 1980s to the changing composition of employment and movements in the rate of unemployment.
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