The distribution of income between labor and capital is not stable: But why is that so and why does it matter?

I review the literature on labor's share of national income in developed and developing countries. These shares have varied systematically over the post-World War II period, rising until the late 1970s and then falling until now. Explanations for the decline in labor's share include technical progress, globalization and a decline in labor's bargaining power, but none of these explanations can account for both the rise and the decline of labor shares over time and for the similar pattern in developed and developing countries. However, movements in oil prices can account for these movements if energy is included in the production function. Such an explanation has broad implications for income distribution, energy conservation and for the modern theory of growth.     

TRADE UNIONS AND THE DISPERSION OF EARNINGS IN BRITISH ESTABLISHMENTS, 1980–90†

ABSTRACT The relationship between unions and earnings dispersion is examined using establishment-level data from the 1980, 1984 and 1990 Workplace Industrial Relations Surveys. Initially the cross-sectional relationship is examined using the 1990 data. The earnings dispersion of skilled and semiskilled workers is seen to be lower across unionized establishments than across non-union establishments; secondly, within-establishment earnings dispersion is lower in plants which recognize trade unions for collective bargaining purposes than in those that do not. All three surveys are then utilized to ascertain to what extent the decline in unionization in Britain has contributed to the rise in earnings inequality of semi-skilled workers. There was a sizeable and important widening of the gap in the dispersion of earnings across union and non-union plants between 1980 and 1990. For semi-skilled earnings, the decline in the share of plants with recognized unions can account for 11-17 percent of the rise in earnings inequality over this time period. The importance of falling union activity (as measured by union recognition) seemed to accelerate through the 1980s. Between 1980 and 1984 the relatively small falls in aggregate recognition explain less than 10 percent of the inequality increase, whereas between 1984 and 1990 about one-quarter of the increase can be accounted for by the fall in unionization. The majority of the rise in earnings inequality is, however, due to a large increase in earnings dispersion across non-union establishments.     

Human resource strategy and unionization: evidence from Taiwan

Over the past two decades, industrial relations (IR) have seen the continuous decline of trade unions and a growing interest in high performance work practices (HPWPs). Human resource researchers, examining the traditional adversarial IR strategies, are increasingly calling for more co-operative and innovative HPWPs in employment relations. Can traditional union adversarial strategies exist along with HPWPs or does one necessarily exclude the other? To answer this question, this study, using questionnaires collected from locally owned and multinational corporations in Taiwan, investigates the association between unionization rate and HPWPs. Contrary to most findings from the Western context, HPWPs were found to have a positive and statistically significant impact on unionization at the firm level in Taiwan. The positive impact may be result of close and friendly relationship between employers and unions and the practices of ‘employer-sponsored’ unions in Taiwan. Furthermore, traditional Confucian culture and institutional factors have strengthened the influence of HPWPs on unionization.     

Does the Change to Win Federation Represent U.S. Labor’s Third Moment? Evidence from National Labor Relations Board Certification Elections, 2003–2005

In the conclusion to Labor in the New Urban Battlegrounds, Daniel Cornfield contends that U.S. labor’s third “moment” is exemplified by the establishment of the Change to Win (CTW) Federation in September 2005 in which the federation’s affiliated unions focused on organizing service sector workers into multi-jurisdictional unions. Cornfield defines a “moment” as an era in which labor adopts innovative organizing strategies for representing workers in industries and/or occupations previously unorganized within the economy. Utilizing National Labor Relations Board (NLRB) certification election data from 2003–2005, this article investigates the organizing patterns, based on the jurisdictions and industries of fifteen unions, nine affiliated with the AFL-CIO and six that joined the CTW, to ascertain if the CTW’s creation initiated U.S. labor’s third moment. Analysis of the certification election data indicates that the CTW’s formation does not constitute the inauguration of third moment unionism in the United States.     

International trade and the U.S. wage structure

Politicians are concerned about the effects of increased foreign trade on U.S. workers. Data from 1978 to 1987 are used to appraise the impact of foreign trade on U.S. manufacturing wages. The results indicate that wages are positively associated with a sector’s level of international comparative advantage. However, this follows from other characteristics aside from the net trade balance. These characteristics may include rent sharing or international technological convergence. Imports and exports also influence wages, where this impact varies with the industry’s unionization. Regardless, the results suggest that greater trade is not a major cause of the decline in U.S. real wages.     

Asset specificity,unionization and the firm's use of debt

This paper considers the combined influence of asset specificity and unionization on the firm's use of debt. While previous literature tends to examine these effects separately, we find that the interaction of the two is critical. Thus, while asset specificity may reduce debt as in Williamson (1988), the presence of a strong union offsets this. Unionization increases the firm's debt as in Bronars and Deere (1991), but asset generality diminishes this effect. We model and test the interactive nature of these two effects. Using firm-specific unionization data and various proxies for asset specificity, we find support for our model. © 1997 John Wiley & Sons, Ltd.     

Organizing College Athletes Utilizing the Civil Rights Unionism Model

In January 2014, Northwestern University (NU) football players filed a certification election petition with the National Labor Relations Board’s (NLRB) Chicago regional office. After the NLRB ruled that they were employees having the legal right to unionize, the football players voted at the end of April 2014 with NU immediately appealing the regional director’s ruling after the balloting. In mid-August 2015, the Washington D.C. NLRB declined jurisdiction in this case, ending the football players’ unionization attempt. Because of the NLRB’s appellate ruling, however, unionization of college athletes remains a distinct possibility. Since a majority of U.S. collegiate basketball and football players are black, this paper argues that the model of unionism that should be adopted in any unionization attempt of these college athletes is civil rights unionism which represents a continuation of the historic, collective struggle of Black athletes to obtain their rights on athletic fields and in classrooms.     

Wage bargaining,union membership,and the organization of unemployment insurance

The paper offers a theoretical analysis of a labor market institution known as the Gent system, which is a system where unions run unemployment insurance (UI) through government-subsidized UI funds. This system is practiced in four Nordic countries with comparatively very high unionization rates. The analysis shows that the Gent system is more conducive to unionization than a compulsory UI system if the Gent system is heavily subsidized by the government or if workers are strongly risk averse. Moreover, a rise in the share of benefits financed by union members is likely to reduce wages as well as union membership.     

Do unions redistribute income from capital to labour? Union density and wage shares since 1960

The income distribution between capital and labour is understudied within industrial relations. This article investigates the relationship between union density, taken as an indicator of the bargaining power of unions, and the wage share of national income in 16 advanced capitalist economies since 1960. It is shown that overall there is a positive relationship between union density and the wage share, as one would expect. But the relationship is weak or non‐existent in the Nordic countries, and in some specifications in Germany and Anglo‐Saxon countries, and overall it is weak in the 1980s and early 1990s. The article discusses the differences between countries in relationship to the literature on corporatism and wage moderation, and the decreasing effect over time with reference to increased global competition and conservatism of monetary policy from about 1980 on, increasing unions' incentives for wage moderation policies.     

Unionism and the public sector

It is incorrect and misleading to speak of unionization as a ‘human right’. The only human right is ‘self-ownership’, i.e. to pursue goals with one's own abilities but with no force or fraud against others. Government cannot dispense rights, only privileges and protections to some at the expense of others. A minimal degree of coercion exercised by government is unavoidable. But labor unions are not governments. Government has granted significant privileges to unions in the private sector, but such are not appropriate for public sector unions.     

Does unionization lead to corporate changes in productivity practices?–insights from Singapore

This paper explores the role of trade unions in influencing corporate change towards productivity improvement for a newly industrialized country– Singapore.Empirical analysis of a sample of firms found unionization to be positively associated with certain productivity practices.The more significant and stronger correlations being the sharing of productivity gains, role Specialization (productivity manager) and productivity as part of corporate policy. Implications of these findings are discussed.

A Sunday Times commentary 2 suggested that, drawing from the Singapore industrial relations experience, trade unions could play a positive role in generating economic growth. If that is seen to be occurring from the macrolevel, it will naturally be interesting to inquire further what effects unionization can have on internal organizational practices, such as in productivity improvement. There may also be practical benefits from having insights into the dynamic forces that are at work when trade unionism is present.

A perspective on the direction (whether positive or negative) and scale of change in the emphasis on productivity improvement practices could help multinational enterprises formulate more effective employee relations policies when operating in Singapore –where tripartite co–operation is the key industrial relations philosophy. Corporations that are in the process of

being unionized may be able to appreciate that resulting change to their operating environments as a consequence of unionization need nor always be unfavourable.Management operating in unionized contexts could rethink their industrial relations strategies in light of the findings here –that it is quite possible to work with trade unions to enhance corporate productivity.

Most significantly, such findings could foster a greater determination by both the management and unions in engendering a co-operative industrial relations climate.This is particularly relevant for corporations operating in countries such as Britain, where industrial relations are traditionally less harmonious.To survive in the increasingly global competition of the 1990s and beyond, Western businesses will need co-operative industrial relations that help to foster productivity improvement efforts. This theme isfurther explored in the last section of the paper.     

Technological Choices and Prices,and Their Implications for the US Economy, 1963–2000

This paper examines the influence of techological change and changing factor prices in the US economy on prices and incomes between 1967 and 2000. Dynamic input–output physical, price and income models provide the conceptual framework for the analysis. The investigation is focused on sectoral price changes, the distribution of income and outlays between capital and labor, and the changing real purchasing power of capital and labor. One major conclusion is that the shares of national income earned by labor and capital have remained relatively constant over the entire period due to offsetting changes which are explicitly identified. At the same time, labor's purchasing power has not increased as much as that of capital.     

The evolution of employers' organisations in the United Kingdom: Extending countervailing power

The concept of countervailing power has been used to suggest that the power of unions explains the origins and development of employers' organisations (EOs). However, unions have declined since the 1970s, but EOs continue to play an important role in employment relations. If pressure from unions is not sufficient to explain continuing employer organisation, what does account for it? This article pursues this question by examining the evolution and activity of UK EOs between the 1960s and 2016. Our countervailing power argument goes beyond a sole focus on unions to include changing pressures and demands on EOs caused by the state such as individual rights legislation and campaigns by civil society organisations. The changing force exerted by these societal pressures helps to explain the shift of EOs' focus from collective bargaining, nowadays only pursued by a minority of EOs, to lobbying, provision of services, legal support, and training.     

UNION WAGE DIFFERENTIALS IN AN ERA OF DECLINING UNIONIZATION†

ABSTRACT This paper examines the change in union wage differentials in Britain between 1984 and 1990, a period of considerable legislative change and marked decline in unionization. Small falls in union differentials are found for manual workers, together with a sharp decline in the premium associated with, and incidence of, the pre-entry closed shop. The decline in the average differentials is found to be largely due to the inability of unions to establish differentials in new establishments. No link is found between the differential and the probability of closure and no evidence of decline in raw differentials in a matched panel.     

中国城镇化进程对房地产价格影响的实证分析

使用城镇化率、流动人口占比、城镇居民人均总收入和房屋竣工面积4个变量指标来反映我国城镇化进程,运用随机效应面板数据模型,对比分析2005—2013年全国、较发达省份和发展中省份的城镇化进程对房地产价格的影响。实证研究表明：城镇化率提高、流动人口占比增加,对房价的影响实际非常有限;城镇居民人均总收入水平的增加才是引起房价上涨的最重要因素;房屋竣工面积的扩大则引起房价的下跌。区域对比研究还发现,由于城镇化进程不同,相比较发达省份,发展中省份的外来务工人员产生了更有效的住房需求。     

De-industrialization and comparative advantage in the global value chain

We investigate the causes of de-industrialization and potential for re-industrialization using trade-linked input–output data from WIOD. By introducing a new global value chain measure of comparative advantage, we relate a sector's share in domestic final demand to that in production and separate the direct effect of trade on its income share. This method identifies the declining share of manufacturing value added in domestic final expenditures to be the main cause of de-industrialization. Differences in comparative advantage between countries do matter, especially in the case of employment shares, but have a limited impact via the direct trade effect on value added. The findings point to a peculiar paradox of industrial policy: precisely when it is successful in raising competitiveness and hence productivity growth of manufacturing, it also furthers the global decline of relative prices in manufacturing. In contrast to the national objectives of re-industrialization, effective industrial policies accelerate de-industrialization in the global economy.     

IMPACT OF RELATIVE POPULATION CHANGE ON REGIONAL INCOME CONVERGENCE: EVIDENCE FROM TURKEY

The aim of this paper is to show the impact of relative population change on regional income convergence. Using the panel data of 64 Turkish provinces from 1987 to 2000, the results from modified convergence analyses show that both income and per capita income between provinces in Turkey indicate converging patterns. The convergence rates for the provincial per capita income, however, turned out to be about 30 percent larger than that of income. In order to examine this difference, the impact of relative population change on the growth process is incorporated using a decomposition analysis. The findings suggest that 17 percent of the 100 percentage point growth of per capita income resulted from the change in population share in favour of the provinces with high per capita incomes. The existence and pace of regional income convergence, therefore, may well be related to the degree of relative population change.     

The Great Recession and Marx's Crisis Theory

To help understand why the Great Recession occurred, this article focuses on its underlying causes and employs Karl Marx's theory of capitalist economic crisis. It shows that U.S. corporations' rate of return on fixed asset investment fell throughout the half‐century preceding the recession, and that this fall accounts for the entire decline in their rate of capital accumulation (productive investment). The investment slowdown led to a decline in the rate of economic growth, which was a main cause of rising debt burdens, as were stimulative fiscal and monetary policies that delayed but exacerbated the effects of the underlying economic problems. The article also refutes the claim that the rate of profit could not really have fallen because massive redistribution of income from wages to profits took place, and it argues that it is unlikely that major crises of capitalism can be eliminated.     

Labor relations at the shop floor level

The tenacious myth that a free economy and free society impoverish working people undergirds modern government interference in labor markets and legal privilege for adversarial labor unions. Managers are concerned about harmony and productivity at the shop floor level. The opposite characteristics of conflict, disco-ordination and inefficiency are anathema. Most of the union difficulties managers must cope with at the shop floor level stem from a fundamental source, namely the philosophy of collectivism. This paper analyzes the fable of labor's disadvantage, wage determination under personal and impersonal conditions, public policy toward labor contracts and the role of businessmen in making labor markets operate more efficiently.     

Market structure and the value of growth

In line with theory suggested by Miller and Modigliani (1961), this paper finds generally positive and statistically significant effects of growth on the current market value of the firm over the 1974–90 period. This intuitive result is not surprising, but the lack of a simple link between the valuation effects of growth and market structure considerations is noteworthy. Importantly, the value of future growth options appears to be closely tied to the firm's ongoing investment in advertising and R&D intangible capital. On the other hand, high current market share does not appear to offer any clear advantage in terms of a firm's ability to expand upon current success. © 1997 John Wiley & Sons, Ltd.