Declining worker power and American economic performance

“Declining unionization, increasingly demanding and empowered shareholders, decreasing real minimum wages, reduced worker protections, and the increases in outsourcing domestically and abroad have disempowered workers with profound consequences for the labor market and the broader economy”

“There is a large body of work documenting the effect of the decline in unionization on the rise in income inequality in the United States; see, for example, DiNardo, Fortin, and Lemieux (1996), Card (1996), Rosenfeld (2014), Farber and others (2018), and Fortin, Lemieux, and Lloyd (2018).”

“In keeping with this, cross-country evidence from Kristal (2010) and Jaumotte and Osorio Buitron (2015) suggests that countries with bigger declines in unionization saw bigger declines in their labor shares and bigger increases in income inequality.”

By Anna Stansbury and Lawrence H. Summers

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