European institutional integration, trade unions and income inequality

What are the distributional implications of European institutional integration? This article argues that European institutional integration exerts a moderating effect on the relationship between trade union strength and income inequality-particularly inequality at the top-within countries of the European Union (EU). I contend that European institutional integration reduces the bargaining power of trade unions due to rising market competition and decreasing union control over the supply of labor. Thus, the effectiveness of trade unions in reducing inequality should decline with progressing European institutional integration. On the basis of a long-term within-country analysis of the EU15, I will show that the effect of trade unions on inequality varies strongly with European institutional integration. Consistent with the theoretical argument, the inequality-reducing effect of trade unions becomes substantially lower the more a country integrates in the EU.