Trade unions are not zero-sum: Global evidence of union density raising absolute incomes of the less well-off without harming richer groups

Stronger, denser unions have consistently been linked to reduced income inequality and higher wages within and across societies. For various reasons, but especially due to data availability, most existing research on this topic is limited to small samples of developed countries. More importantly, not a lot is known about the precise composition of the inequality-reducing effect of unions. Do reductions in inequality (and increases in wages) come at the expense of absolute living standards for the middle class or the top income decile in society? Do unions only boost workers’ wages or do they manage to increase living standards even for those at the very bottom of society, most of whom are not earning wages? This study investigates the issue in a global sample of over 100 countries, employing data on disposable income for each income decile. I find that higher union density predicts absolute increases in disposable income for the bottom half of the distribution without absolute living standards of higher deciles, including the top, being harmed. Crucially, I find that the individualism-collectivism cultural divide strongly moderates this result, such that it vanishes in very collectivist societies and becomes even stronger in individualist cultures.