Does egalitarian pay add value? Pay compression,union structure and manufacturing productivity growth in the OECD

Abstract

Unions reduce aggregate pay inequality. Where industrial, or encompassing, unionism predominates, movements have generally coherently pursued inter-enterprise or inter-occupational compression. However, pay compressions have generally been rather unstructured where unionism is segmented by enterprise or the craft-general divide. Analysis of labour productivity growth in manufacturing across 14 OECD countries between 1965 and 1995 shows that an emphasis on aggregate pay compression hampers productivity growth under encompassing unionism, but under segmented unionism promotes it.