According to a new study from the International Monetary Fund,
Inequality has risen in many advanced economies since the 1980s, largely because of the concentration of incomes at the top of the distribution. Measures of inequality have increased substantially, but the most striking development is the large and continuous increase in the share of total income garnered by the 10 percent of the population that earns the most—which is only partially captured by the more traditional measure of inequality, the Gini coefficient (see Chart 1). . .
we find strong evidence that lower unionization is associated with an increase in top income shares in advanced economies during the period 1980–2010 (for example, see Chart 2), thus challenging preconceptions about the channels through which union density affects income distribution.
The main channels they identify include wage dispersion (unionization reduces inequality by helping equalize the distribution of wages), unemployment (union density does not, in general, raise unemployment), and redistribution (strong unions induce policymakers to engage in more redistribution by mobilizing workers to vote for parties that promise to redistribute income or by leading all political parties to do so). Thus, they find, lower union density can increase top income shares by reducing the bargaining power of workers.
The obvious policy conclusions, then, are to improve rules and regulations that allow workers to organize and bargain collectively and to engage in corporate governance reforms that give workers more of a say in the major decisions taken by enterprises—not only in terms of executive pay, but also where and when jobs are created and how the resulting surplus is allocated.