HETEROGENEITY AND UNION MEMBERSHIP DETERMINATION

This paper formalizes theoretical and empirical analyses of the determination of union membership. It is argued that an important (and usually ignored) consideration affecting the union status of workers is the externalities between (potential) union members: The gain a worker derives from unionization is affected by the characteristics of the workers who already belong to the union, and the gain union members derive from admitting an additional worker to membership depends on that worker's characteristics. Thus, two conditions must hold if a worker is to join a union: (1) unionization should increase his wage, and (2) union members must benefit from adding him. The main implication of this analysis is that in a given industry/occupation a union is more likely to form among workers with lower rents. To test this proposition, I present an empirical analysis using data from the May 1979 Current Population Survey (CPS) Public Use Sample. A procedure for measuring worker's rent is discussed and certain relationships between rent and union membership are identified. © 1990 Journal of Labor Research.