Unionization, Inequality and Redistribution
| DOI | http://doi.org/10.1111/bjir.12045 |
| Published date | 01 December 2013 |
| Date | 01 December 2013 |
Unionization, Inequality and Redistribution
Jonas Pontusson
Abstract
This article explores the implications of the OECD-wide decline of union
density for earnings inequality and income redistribution by looking at aggre-
gate (country-level) data. Over the period 1975–95, countries that experienced
relatively large declines in union density also experienced relatively large
increases in earnings inequality. In addition, governments apparently became
less willing to engage in ‘compensatory redistribution’ in these countries. Since
the early 1990s, however, union decline has become less closely associated with
rising earnings inequality and redistributive policy changes. I argue that the
declining relevance of unionization has to do with changes in the position of
union members in the income distribution. In most OECD countries, the
average union member has become relatively better off as union density has
declined and union members have probably become less supportive of wage
solidarity and redistributive government policies.
1. Introduction
This article explores the implications of union decline for the rise of inequal-
ity and the politics of redistribution in the OECD countries over the last three
decades. Relying on aggregate (country-level) data, my discussion of this
topic is not meant to be definitive: rather, my goal is to take stock of what
such data tell us and to identify questions for further research and analysis.
Recent literature in comparative political economy identifies, and seeks to
resolve, what Lindert (2004: 15) and Iversen and Soskice (2009: 440) refer
to as the ‘Robin Hood paradox’.1Although higher inequality would seem to
imply that more citizens stand to gain from redistribution, governments in
countries with a more egalitarian distribution of market income, measured
based on gross earnings from employment, typically engage in more redis-
tribution through taxes and transfers than governments in more unequal
countries. Looking within countries over the last two or three decades, the
same puzzle appears, with government policies in many countries apparently
Jonas Pontusson is Professor of Comparative Politics at the Université de Genève.
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British Journal of Industrial Relations doi: 10.1111/bjir.12045
51:4 December 2013 0007–1080 pp. 797–825
© John Wiley & Sons Ltd/London School of Economics 2013. Published by John Wiley & Sons Ltd,
9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.
becoming more ‘pro-rich’ as inequality increases. Why have democratically
elected governments so rarely responded to rising inequality by engaging in
new redistributive initiatives?
The observation that unionization has declined dramatically at the same
time as inequality has risen will not come as a surprise to anyone, but it is fair
to say that the new literature on the political economy of redistribution does
not pay much attention to trade unions or other ‘intermediary organiza-
tions’. Most of this literature has a distinctively individualist orientation,
focusing on individual preferences for redistribution and, secondarily, on the
aggregation of individual preferences by political parties. There is, however,
an important theoretical tradition in comparative welfare-state research,
commonly known as ‘power resources theory’ (PRT), which assigns a key
explanatory role to the collective organization of workers. As articulated
most clearly by Bradley et al. (2003), the PRT solution to the Robin Hood
paradox holds that earnings compression and redistribution are both to be
attributed to ‘working-class mobilization’ or, in other words, that the nega-
tive association between earnings inequality and redistribution is essentially
spurious. Representing the interests of the median union member, the wage
demands articulated by unions typically favour low-wage workers relative to
high-wage workers, and, as a result, union strength is associated with earn-
ings compression. At the same time, unions mobilize workers to vote for
parties that promise to redistribute income. This mobilization may lead to
left government, as typically emphasized by PRT scholars (see also Korpi
2006), but it could also lead all parties to engage in more redistribution.
In what follows, I will show that, across OECD countries, levels of earn-
ings inequality and redistribution are indeed associated with levels of union-
ization in the manner posited by PRT. I shall also present evidence in support
of the key PRT claim that unions play an important role as agents of electoral
mobilization. Across countries, the decline of union density correlates quite
closely with the decline of voter turnout over the last two or three decades.
However, cross-national comparison of changes over time poses a challenge
for PRT. Over the period from the late 1970s to the mid-1990s, union decline
is clearly correlated with changes in earnings inequality and redistribution in
the manner predicted by PRT, but this is not the case for the period from
1995 to 2010. Union decline seems to have become less important as a driver
of rising inequality and also seems to have become less relevant for explaining
the lack of compensatory redistribution.
My tentative explanation of the attenuation of the egalitarian effect of
unionization has to do with the position of union members in the income
distribution. In the PRT-inspired literature, the interests of workers and
union members are always the same: what varies, across countries and over
time, is the extent to which workers are organized in unions. By contrast, I
want to bring to the fore the question of who unions organize. As we shall
see, union members are relatively well paid today in most OECD countries.
Thus is by no means obvious that the material interests of the average union
member are served by earnings compression or redistribution. Although I do
798 British Journal of Industrial Relations
© John Wiley & Sons Ltd/London School of Economics 2013.
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