Income Inequality and Union Density: The Watchdog that Stopped Barking

• In Event: The Politics of Inequality

Abstract

While inequality is peaking, we know little about its effects on democratic politics. This is the first study to systematically analyze its implications for labor organizations. Intuition would suggest that growing inequality incentivizes citizens to join unions (to curb wealth disparities). This would in turn increase union density. Conversely, this study argues that income inequality reduces union density. This happens because when inequality is high, workers perceive unions as ineffective and not beneficial to the worse-off. Membership is so disincentivised. To test the Deunionization hypothesis, this study uses longitudinal data on established democracies between the early 1960s and the late 2000s. To address endogeneity, the analysis employs an instrumental variable approach. The results suggest that, contrary to intuition, growing inequality depresses union density. The findings have important implications for the future functioning of unions, and - more generally - for our understanding of the politics of inequality. The results also contribute to explaining why established democracies have failed in curbing inequality.

Author

• Michele Fenzl, University of Essex