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Deunionization and Pay Inequality in OECD Countries: A Panel Granger Causality Approach

  • Unal Tongur


    (Department of Economics, METU)

  • Adem Yavuz Elveren


    (Department of Economics, METU and Sutcu Imam University)

The impact of unionization on wage inequality has been examined by a vast literature. Focusing mostly on the US and the UK in time series analyses or on OECD countries in panel data analyses, a bulk of these studies have found a negative impact of deunionization (i.e. decline in the union density rate) on distribution of wages. By utilizing two inequality data sets both provided by the University of Texas Inequality Project this paper contributes to the literature, analyzing the causality relationship between deunionization and pay inequality for 24 OECD countries for the 1963-2000 period within a panel Granger structure. Our findings show not only that there is causality from union density to income inequality but also, perhaps more importantly, point out that there is causality running from income inequality to union density for various set of countries and time periods.

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Paper provided by ERC - Economic Research Center, Middle East Technical University in its series ERC Working Papers with number 1306.

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Length: 36 pages
Date of creation: May 2013
Date of revision: May 2013
Handle: RePEc:met:wpaper:1306
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