Employment relations and growing income inequality: Causes and potential options for its reversal

Abstract

The growth of income inequality is now recognized to be one of the most important developments in employment relations of our time. While inequality has increased in many parts of the world, it has been most pronounced in the United States. We review the factors that have been suggested to cause the growth in inequality and, given these multiple causes, suggest a set of actions that might begin to reverse this trend. We give special attention to the changes in the employment relationship related to labor market institutions – including unions and other forms of worker representation, wage regulations and enforcement, and safety net policy – while also accounting for explanations and proposals that focus on technology, skills and education, and globalization. Additionally, we argue that emerging forms of organizational restructuring are becoming increasingly important to the study of inequality and its remedies.