This study examines the `union threat effect' across different sectors in Korea using a sample of individual workers from the Korean Wage Survey. It focuses on the dynamic mechanism of the union threat effect allowing for three factors: employers' strategic choices, labour mobility and condition of the product market — all of which are interwoven. The empirical findings suggest that unionization does not threaten employers in either the small-scale or large-scale firm sectors. However, the union threat effects are evident in the medium-size firm sector, where the employers tend to raise their wage bill to avoid unionization at their workplace.
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