Abstract

This article focuses on the role of unions and their influence on economic inequality. Section 2 reviews the literature regarding the union effect on wages and wage inequality. Section 3 considers the separate contributions of union power, membership composition, bargaining coordination, and wage policy. Section 4 introduces the distinction between membership and coverage, while the following two sections discuss the impact of union power on earnings inequality when coverage is either exclusive or inclusive. Section 7 discusses the rationale for unions aiming for wage compression while Section 8 estimates how the presence of trade unions has influenced the extent and dynamics of earnings inequality across advanced economies during the 1980s and 1990s. For this purpose indicators have been developed for trends in equality and union presence from different sources. Section 9 concludes.