Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/102306
Authors: 
Herzer, Dierk
Year of Publication: 
2014
Series/Report no.: 
Diskussionspapier, Helmut-Schmidt-Universität, Fächergruppe Volkswirtschaftslehre 146
Abstract: 
Although a large body of research has examined the effects of unions on the wage distribution, surprisingly little attention has been devoted to the effects of unions on the distribution of income. This paper examines the long-run relationship between unionization and income inequality for a sample of 20 countries. Using heterogeneous panel cointegration techniques, we find that (i) unions have, on average, a negative long-run effect on income inequality, (ii) there is considerable heterogeneity in the effects of unionization on income inequality across countries (in about a third of cases the effect is positive), and (iii) long-run causality runs in both directions, suggesting that, on average, an increase in unionization reduces income inequality and that, in turn, higher inequality leads to lower unionization rates.
Subjects: 
unions
income inequality
cross-country heterogeneity
causality
panel cointegration
JEL: 
J51
D31
C23
Document Type: 
Working Paper

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