The distribution of pay differs significantly across countries and over time among advanced industrial societies. In this paper, institutional and political determinants of pay inequality an studied in sixteen countries from 1980 to 1992. The most important factor in explaining pay dispersion is the level of wage-setting, i.e., whether wages are set at the level of the individual, the plant, the industry, or the entire private sector. The impact of centralization is the same whether centralization occurs via collective bargaining or via government involvement in private-sector wage-setting. The concentration of unions and the share of the labor force covered by collective bargaining agreements also matter. After controlling for wage-setting institutions, other variables such as the governing coalition, the size of government, international openness, and the supply of highly educated workers have little impact. Economic, political, and norm-based explanations for the association of centralization with egalitarian outcomes are discussed.

In spring 2002, APSA President-Elect Theda Skocpol appointed this Task Force on Graduate Education, representing a variety of institutions, political science subfields, scholarly backgrounds, and methodological viewpoints. She asked its members to report on ways to strengthen graduate education in political science. The Task Force quickly concluded that no single structure of graduate training could be appropriate for the wide range of institutions offering graduate instruction in political science, and that departments must decide for themselves what programs best suited their capacities and interests.

Mancur Olson's Logic of Collective Action has provided the dominant framework for understanding the impact of encompassing unions and employers confederations on wage-setting in Western Europe. In particular, scholars have drawn upon Olson's writing to describe corporatism as a means for attaining the collective goods of low unemployment and low inflation in highly unionized labor markets. The strongest impact of corporatist institutions in the labor market, however, was to generate greater wage equality rather than superior macroeconomic performance. To understand the most important impact of corporatist institutions, a new framework that emphasizes the effect of wage-setting institutions on the distribution of wages and salaries is needed. In this article, we present one component of such a framework with a model that illustrates how both employers and unions might gain by central agreements that reduce wage inequality relative to the equilibrium wage distribution with decentralized wage-setting.

Chapter 1.2 Commentary: Legislation Versus Bargaining Power: The Evolution of Scandinavian Labor Standards Karl-Ove Moene, Karl-Ove MoeneSearch for more papers by this authorMichael Wallerstein, Michael WallersteinSearch for more papers by this author Karl-Ove Moene, Karl-Ove MoeneSearch for more papers by this authorMichael Wallerstein, Michael WallersteinSearch for more papers by this author Book Editor(s):Kaushik Basu, Kaushik BasuSearch for more papers by this authorHenrik Horn, Henrik HornSearch for more papers by this authorLisa Román, Lisa RománSearch for more papers by this authorJudith Shapiro, Judith ShapiroSearch for more papers by this author First published: 01 January 2003 https://doi.org/10.1002/9780470754818.ch1bCitations: 1 AboutPDFPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShareShare a linkShare onFacebookTwitterLinked InRedditWechat Citing Literature International Labor Standards: History, Theory, and Policy Options RelatedInformation

The welfare state is generally viewed as either providing redistribution from rich to poor or as providing publicly financed insurance. Both views are incomplete. Welfare policies provide both insurance and redistribution in varying amounts, depending on the design of the policy. The authors explore the political consequences of the mix of redistribution and insurance in the context of studying the impact of income inequality on expenditures in different categories of welfare spending in advanced industrial societies from 1980 to 1995. They find that spending on pensions, health care, family benefits, poverty alleviation and housing subsidies is largely uncorre-lated with income inequality, but that spending on income replacement programs such as unemployment insurance, sickness pay, occupational illness and disability are significantly higher i n countries with more egalitarian income distributions. They show that this pattern is exactly what a theory of political support for redistributive social insurance programs would predict.

Is the political support for welfare policy higher or lower in less egalitarian societies? We answer the question using a model of welfare policy as publicly financed insurance that pays benefits in a redistributive manner. When voters have both redistributive and insurance motives for supporting welfare spending, the effect of inequality depends on how benefits are targeted. Greater inequality increases support for welfare expenditures when benefits are targeted to the employed but decreases support when benefits are targeted to those without earnings. With endogenous targeting, support for benefits to those without earnings declines as inequality increases, whereas support for aggregate spending is a V-shaped function of inequality. Statistical analysis of welfare expenditures in advanced industrial societies provides support for key empirical implications of the model.

In this paper, we develop the implications of the view of welfare policies as publicly financed insurance policies that pay benefits relative to contributions in a redistributive manner. With the majority of voters having both redistributive and insurance motives for supporting welfare spending, the impact of inequality on voters' support for welfare depends on how benefits are targeted.

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The eight countries examined in this study-Austria, Belgium, Denmark, Finland, Germany, the Netherlands, Norway, and Sweden-have long been viewed as exemplifying ''corporatist'' industrial relations systems, in which union coverage is high, unions are influential and commonly have strong ties to political parties, and collective bargaining is institutionalized and relatively centralized. Many observers have recently argued that such corporatist bargaining institutions are everywhere being undermined by changes in the global economy. The authors, using data from a wide variety of primary and secondary sources, test whether changes in patterns of wage-setting in the private sector are consistent with that claim. Although they find some signs that corporatist wage-setting institutions are in decline, they also find offsetting signs of the resiliency of such institutions. Overall, the evidence does not indicate that wage-setting in the private sector is undergoing a general process of decentralization in these eight countries.

Social democracy in post-war Europe has been dedicated to the proposition that it is possible to obtain the socialist virtues of equality and security without losing the capitalist virtue of economic efficiency. The trouble with capitalism, from the social democratic perspective, is that the market alone fails to provide either a just distribution of rewards or adequate insurance against life's risks, including the risks of ill health, inadequate retirement income and unemployment. In Norway and Sweden the post-war social democratic regimes emphasized three interlocking policy commitments. First, wage differentials were to be reduced through centralized, solidarity-type bargaining that pushed up the wages of the low-paid workers while restraining the wage increases of highly-paid workers. Second, security for all was to be provided by welfare policies that supplied basic goods — defined as including pensions, decent housing, education and health care — on a relatively universal basis. Third, full employment was to be guaranteed by a combination of macroeconomic and labour policies.

We investigate the effects of wage compression through centralized collective bargaining when growth depends on the continual reallocation of labor from older, less productive plants to new, more productive plants. We first study the compression of wage differentials that derive from decentralized bargaining in heterogeneous plants. We then consider wage compression when wage difterentials arise from competition among employers over workers of differing quality. We show that wage compression through centralized bargaining can result in higher profits and greater entry of new plants than either decentralized bargaining or a competitive labor market.

It is commonly believed that corporatist bargaining institutions have been in general decline in the 1980s and 1990s. The leading explanations of the purported universal trend toward greater decentralization of collective bargaining are the impact of technological change, changes in the occupational structure, and growing international economic integration. Decentralization should be particularly visible in the Nordic countries, because collective bargaining was more centralized in these countries in the 1960s and 1970s than in any others in Western Europe. In this article, the authors present data on the changes in the centralization of wage bargaining in the four Nordic countries since 1950. They document that a significant decentralization of collective bargaining has occurred in Sweden, as is well known, but not in the other three. The article concludes with a review of possible explanations of Swedish exceptionalism.

In this comment we compare the asset-based approach of Bowles and Gintis with the alternative approach associated most closely with social democracy but followed in all advanced industrial societies to some extent.

Dans les pays nordiques, le corporatisme est associe au libre commerce et a la necessite de demeurer competitif. La centralisation des negociations a permis la reduction des differences salariales et le plein emploi (taux de chomage faible). Mais depuis quelque temps la politique sociale democrate, a l'origine des elements cites precedemment, est en declin non seulement en Europe et aux Etats-Unis mais aussi en Scandinavie