Diminishing Returns: Egalitarian Collective Bargaining Institutions after the Crisis Onset

Upholding wages of lower-paid, lower-skilled workers has historically constituted a centerpiece of labor solidarity across advanced industrial countries.  The post-war era was marked by a range of egalitarian collective bargaining institutions embedded with measures to protect and defend wage development of workers, especially those with the lowest earnings. Despite powerful egalitarian initiatives, persistent and growing inequality among workers of different skill-levels has dominated the landscape of advanced wealthy democracies in past decades, marked particularly by worsening pay conditions amongst the lowest paid earners. Honing in from the coarse similarities, we can observe that labor institutions supporting social solidarity present different levels of vulnerability to the common pressures towards liberalization.  However, it is not clear if the characteristics of collective bargaining that historically yielded higher levels of pay inequality continue to have the distinctive effects of reducing the escalation of inequality.  In this paper, I conduct a series of statistical analyses to evaluate the explanatory value of institutional characteristics of collective bargaining institutions on changes in wage inequality among full-time workers across advanced industrial democracies, using pooled cross-section time-series model with data from 14 OECD countries from 1980 to 2012.   I test for discernable and significant differences in the effects of collective bargaining institutions during the periods before and after the onset of the financial crisis in 2008.