Inevitable Inequality? Unions, Fatalistic Beliefs, and Support for Redistribution

Authors – Michael Becher, Jonas Pontusson.

Abstract :

Why have many rich democracies retreated from redistribution, often in the face of increasing economic inequality? One explanation is the decline of labor unions as a countervailing institution that shapes norms of solidarity and pushes back against fatalistic beliefs that inequality is an inevitable consequence of globalization or technological change. However, the micro-evidence on the relevance of the union-based explanation remains incomplete. First, it is hard to tell from existing evidence whether union membership has a causal effect on inequality beliefs and preferences for redistribution. Union membership is a choice or may result from sorting into unionized workplaces based on unobserved confounders. Second, while unions are heterogenous within and across countries, existing studies largely treat them as homogenous. We address these limitations using the Inequality and Politics survey, which covers 14 countries and contains detailed information on union membership and a battery on inequality and preferences for redistribution. For identification, we leverage plausibly exogenous variation in union membership based on whether people enter the labor market during peak unionization in their country. Preliminary instrumental variable estimates suggest that, on average, union members are less likely to view economic inequality as inevitable consequence of technological change or tickle-down economic growth than comparable non-members. This contrasts with naïve OLS regressions and helps to explain the union membership premium in support for government redistribution of income and wealth. Next, we will explore whether effects vary by the type of union, whether they are encompassing or narrow.