Benefits of membership in a labor organization in Benin

Abstract

Labor market institutions, broadly defined as government regulations and union activity, affect labor outcomes in developing countries. This paper conducts an empirical examination of the impact of unionization on formal and informal sector workers in Benin. The study explores a database derived from the integrated regional survey on employment and the informal sector in West African Economic and Monetary Union (WAEMU) member states conducted in 2017. The methodological approach is based on the estimation of an endogenous switching regression model that allows for problems related to selectivity and endogeneity bias. The results show that union's membership has a positive effect on workers' pay. Workers' membership of trade unions enables them to increase their pay level by an average of 33.06 %. Moreover, this pay is influenced by workers' skill levels and the length of time spent at work. On the other hand, employees in the formal sector are the most likely to be unionized. In a context of weakening purchasing power due to exogenous shocks to the Beninese economy, these results call for the repositioning of trade unions in their mission of intermediation between workers and employers, and the State.