Effects of Labor Legislation and Industry Characteristics on Union Coverage in Canada

Abstract

The authors investigate the determinants of union coverage using 1986 cross-section data on Canadian workers. Larger firm size, larger establishment size, and higher injury rates increase the probability of union coverage. Industry concentration, import penetration, and the substitutability of labor do not affect coverage through their impact on the union-nonunion wage differential, but concentration increases the probability of coverage through a mechanism unrelated to the wage differential. Mandatory checkoff provisions increase the probability of coverage, but the estimated effect is barely significant. Restrictions on replacement workers and interprovincial differences in automatic certification provisions have statistically insignificant effects. Finally, the results are sensitive to treating some industry characteristics as endogenous (that is, jointly determined with union coverage and union and nonunion wages)—a treatment not used in other studies.

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