The Effects of Creativity and Culture on Trade Union Density

Abstract

Empirical studies of trade union membership growth have used the standard BainElsheikh [Bain, G. S. and F. Elsheikh, Union Growth and the Business Cycle, Oxford: Blackwell, 1976) model. In this model, rate of change of trade union membership is the dependent variable and rate of change in money wages, rate of change in prices, level of unionization, and unemployment rate are the independent variables. However, trade union density (unionization rate) has been falling in many developed countries. The decline started over four decades ago and has not reached a turning point yet. Traditional models do not seem to adequately explain the decline of trade unions. Hence I examined the influence of creativity and culture on union density within the B-E model for a sample of 22 developed market economies. I used union density as the dependent variable, unemployment rate, rate of growth of gross domestic product (GDP), and creativity and culture as independent variables. Since employers can easily oppose trade unions and unemployed union members drop out of unions in times of high unemployment rate, it should have a negative effect on trade union density. Growth of GDP is a proxy for price increases and money wage increases. In growing economies, prices generally increase and trade unions try negotiating higher wages for not letting real wages erode. This may attract more workers to join the union, thereby creating a positive effect on trade union density. According to Florida [The Rise of the Creative Class, Melbourne: Pluto Press, Australia, 2002], a creative community is characterized by three t’s—technology, talent, and tolerance. Since one of the components of Florida’s creativity index is tolerance, one can assume that tolerant communities will be accepting of and willing to work with various interest groups, including trade unions. Thus, I hypothesize that the higher the level of creativity of a country, the higher the level of union density will be. Hofstede [Culture and Organizations, London: Harper Collins, 1991] has identified four dimensions of national culture—power distance, individualism vs. collectivism, masculinity vs. femininity, and uncertainty avoidance. Higher power Atl Econ J (2012) 40:101–102 DOI 10.1007/s11293-011-9296-9