Working Paper

Unionism and Peer-Referencing



Panos G & Theodossiou I (2010) Unionism and Peer-Referencing McCausland W (Editor) University of Aberdeen Business School Working Paper Series, 2010-03.

This study assesses the "fair-wage-effort" hypothesis, by examining (a) the relationship between relative wage comparisons and job satisfaction and quitting intensions, and (b) the relative ranking of stated effort inducing-incentives, in a novel dataset of unionised and non-unionised European employees. By distinguishing between downward and upward-looking wage comparisons, it is shown that wage comparisons to similar workers exert an asymmetric impact on the job satisfaction of union workers, a pattern consistent with inequity-aversion and conformism to the reference point. Moreover, union workers evaluate peer observation and good industrial relations more highly than payment and other incentives. In contrast, non-union workers are found to be more status-seeking in their satisfaction responses and less dependent on their peers in their effort choices The results are robust to endogenous union membership, considerations of generic loss aversion and across different tenure profiles. They are supportive of the individual egalitarian bias of collective wage determination and self-enforcing effort norms.

Unions; Peers; Inequity Aversion; Conformism; Discretionary Effort

JEL codes

  • C25: Single Equation Models; Single Variables: Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
  • J22: Time Allocation and Labor Supply
  • J28: Safety; Job Satisfaction; Related Public Policy
  • J51: Trade Unions: Objectives, Structure, and Effects

Title of seriesUniversity of Aberdeen Business School Working Paper Series
Number in series2010-03
PublisherUniversity of Aberdeen
Publisher URL
ISSN of series0143-4543