Building Strategic Capacity: The Political Underpinnings of Coordinated Wage Bargaining

Abstract

Encompassing labor movements and coordinated wage setting are central to the social democratic economic model that has proven successful among the nations of Western Europe. The coordination of wage bargaining across many unions and employers has been used to explain everything from inequality to unemployment. Yet there has been limited theoretical and quantitative empirical work exploring the determinants of bargaining coordination. I argue formally that more unequally distributed resources across unions should inhibit the centralization of strike powers in union federations. Using membership as a proxy for union resources, I find empirical evidence for this hypothesis in a panel of 15 OECD democracies, 1950–2000. I then show that the centralization of strike powers is a strong predictor of coordinated bargaining.