Risk Aversion and Trade‐Union Membership*

If trade unions provide only their members with insurance against income variations, as a private good, this insurance will provide a stronger incentive for more risk‐averse employees to become union members. Using data from the German Socio‐Economic Panel (SOEP) and various direct measures of individual risk attitudes, we find robust evidence of a positive relationship between risk aversion and the likelihood of union membership for full‐time employees. This association is particularly strong for males and in West Germany.