• Journal of Labour Economics
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• v.30 no.3
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• pp.43-75
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• 2007

This study reviews the trend of job separation rates for three years from 2002 to 2005 and investigates the various elements which influence this trend, especially the role of the labor unions, by using Korean Labor Panel data. In the basic statistics, the job retention rate of union members were higher by an average of 28.3% points compared to non-union members, but in the results of controlling the observed variables of individual influences in changing jobs, it was estimated that unions increase the job retention rate by 11% to 13% points. To investigate the effect of unions on the job stability of workers in detail, the non-linear decomposition method developed by Fairlie (2003) was used in the analysis. In examining the difference of job separation rates between union members and non-union members through observed variables of workers in explainable parts and unexplainable parts by using the non-linear decomposition technique, the contribution of the explainable part was estimated to be 67% to 74% and the unexplainable part accounted for the rest which was 26% to 33%. This suggests that not only does the union contribute to the job stability of its members, but the propensity to change jobs for a worker who is a union member is on average lower than that of a worker who is not a union member or who works at an establishment that does not have a union. The results of the empirical analysis show that the job stability effect of labor unions is limited within the boundary of a maximum 7% to 9% points. The reason for the effect of labor unions on job stability being so low is due to various reasons such as collective bargaining structure by company, intensified business competition after the financial crisis, and labor market segmentation.