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What Has Happened to the Workers’ Bargaining Power?

This study examines the impact of labor institutions and collective bargaining on income inequality and wage share. It explores the trends in union density, bargaining coverage, and corporatist policy-making, and discusses the implications for labor market regulation and financing of generous transfers.

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What Has Happened to the Workers’ Bargaining Power?

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  1. What Has Happened to the Workers’ Bargaining Power? Lucio Baccaro University of Geneva Department of Sociology Sept. 1, 2009

  2. Focus on Workers’ Protective Institutions • Union Density • Collective bargaining coverage • Collective bargaining structure • Participation in Public Policy-Making/Tripartism

  3. Union Density and Inequality(Between)

  4. C.B. Structure and Inequality(Between)

  5. A Puzzle • Labor’s protective institutions are robustly associated with cross-sectional differences in income inequality • When it comes to within-country differences there seems to be no association • Hypothesis: Labor institutions have begun to operate in a rather different way in the era of globalization

  6. Mean Yearly Union Density in 16 OECD countries

  7. Change in Union Density Rates

  8. Mean Yearly Bargaining Coverage in 16 OECD countries

  9. Index of Corporatist Policy-Making (16 Countries)

  10. Bargaining Coordination and Tripartism Bargaining Coordination Tripartism

  11. Corporatist Scores and Rankings

  12. Trends in Protective Institutions • Dramatic decline in union density rates • Much smaller decline in bargaining coverage • Resilience of corporatist policy-making • Trade-off between collective bargaining decentralization and increased participation in corporatist policy-making • Overall, no evidence of generalized dismantling, at least in Continental Europe

  13. Impact of Corporatism on Inequality

  14. Impact of Corporatism on the Wage Share

  15. Effects of Workers’ Protective Institutions • Corporatism (and particularly collective bargaining coordination) survives but is no longer redistributive • Social pacts of the 1990s: macro-concessionary bargaining • Redistribution through transfers seems more effective

  16. Determinants of Societal Inequality

  17. What Has Happened? • Corporatist institutions without strong unions are empty shells? • More elastic labor demand? • Internalization of neo-liberal imperatives? • E.g. transformation of social democratic parties

  18. Implications • Labor market channel sealed off for redistribution • Transfers still highly effective • Questions: • 1) Do we need a new model of labor market regulation? • 2) How do we finance generous transfers?

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