Graphs of the day: on labour unions and income inequality

Author: Ricardo Fuentes-Nieva  (@rivefuentes)

Al Jazeera America has an opinion piece today on why unions still matter.  It shows this graph from a paper by Larry Mishel and Will Kimbal at the Economic Policy Institute.

Unions_Income_Share

Mishel and Kimball build upon previous work  by Colin Gordon who concludes,

Labor unions both sustained prosperity, and ensured that it was shared. The impact of all of this on wage or income inequality is a complex question (shaped by skill, occupation, education, and demographics) but the bottom line is clear: There is a demonstrable wage premium for union workers.”

This analysis is based on US data. There is some evidence that unionization is falling in other parts of the world. The OECD database indicates that trade union density has fallen from 20.8 to 16.9% between 1999 and 2013. This has occurred at a time of wage stagnation and the increase of income of the top 1 % which, as Gordon also suggests, is the result of changes in the power of workers in collective bargaining.

The IMF (surprisingly – to me at least) has voiced a similar concern. They find a comparable pattern in advanced economies.

Unions_Income_Share_Corr

I haven’t yet seen work on what’s happening in lower income countries (but I have to admit I haven’t looked that hard). Any idea on what the pattern has been in the developing world or good, reliable sources of information?

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