Union Power, Policy Making, and Unemployment in Western Europe, 1972-1993

Abstract

Most recent research on the relationship between trade unions and unemployment focuses on the size and structure of trade union movements and argues either that strong unions are bad for unemployment, due to their effect on wages, or that encompassing unions are good for unemployment, because their wage-setting behavior takes economic externalities into account. This article reports the results of testing the more political hypothesis that trade union influence on government economic policy is important in leading to lower unemployment via the implementation by governments of more vigorous anti-unemployment policies than would otherwise be used. A pooled time-series analysis provides support for this theory in revealing that union influence, as indicated by a newly developed measure of union participation in economic policy making, was consistently associated with lower unemployment over a range of 13 West European countries during the period 1972 to 1993.