Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/203558
Authors: 
Föll, Tobias
Hartmann, Anna
Year of Publication: 
2019
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2019: 30 Jahre Mauerfall - Demokratie und Marktwirtschaft - Session: Labor Economics VII No. D10-V2
Abstract: 
Over the past 50 years, the U.S. and several European labor markets have undergone two most incisive developments: job market polarization and deunionization. In this paper, we argue that routine-biased technical change is not only the driving force behind polarization, as prevalently assumed, but that routine-biased technical change is the common driving force behind both deunionization and polarization. In a search and matching framework with endogenous occupational and endogenous union membership choices, we show that the shift in employment and income shares in favor of high-skill and low-skill occupations worsens the bargaining position of unions, which crucially depends on the occupational structure inside a firm. This directly affects the membership choice of workers, who base their decision on the potential union wage premium. The ensuing deunionization provides further incentives for middle-wage workers to switch occupations and thus amplifies both job market polarization and the increasing income inequality.
Subjects: 
Labor markets
Inequality
Search and matching
Unions
Occupational choice
JEL: 
E02
E24
J51
J62
J64
O33
Document Type: 
Conference Paper

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