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Trade Union Density and Inflation Performance: Evidence from OECD Panel Data

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  • C. BOWDLER
  • L. NUNZIATA

Abstract

This paper examines the impact of union membership rates on inflation in OECD countries. A positive effect of union density is estimated, even after controlling for fixed effects and time dummies. Additional institutional characteristics, for example union coordination, employment protection laws and central bank independence, do not affect inflation directly in a panel setting, but do influence the size of the unionization coefficient via interaction terms. The results are robust to controlling for potential common causes such as oil price shocks and the political stance of the government, and to using GMM/IV techniques to handle possible endogeneity biases.

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  • C. Bowdler & L. Nunziata, 2007. "Trade Union Density and Inflation Performance: Evidence from OECD Panel Data," Economica, London School of Economics and Political Science, vol. 74(293), pages 135-159, February.
    • Handle: RePEc:bla:econom:v:74:y:2007:i:293:p:135-159
    DOI: 10.1111/j.1468-0335.2006.00532.x
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    Cited by:

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    2. Stephen G. Cecchetti & Peter Hooper & Bruce C. Kasman & Kermit L. Schoenholtz & Mark W. Watson, 2007. "Understanding the Evolving the Evolving Inflation Process," Working Papers 2007-4, Princeton University. Economics Department..
    3. John Pencavel, 2009. "How Successful Have Trade Unions Been? A Utility-Based Indicator of Union Well-Being," ILR Review, Cornell University, ILR School, vol. 62(2), pages 147-156, January.
    4. John T. Addison, 2016. "Collective bargaining systems and macroeconomic and microeconomic flexibility: the quest for appropriate institutional forms in advanced economies," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-53, December.
    5. Daniele Checchi & Cecilia García‐Peñalosa, 2010. "Labour Market Institutions and the Personal Distribution of Income in the OECD," Economica, London School of Economics and Political Science, vol. 77(307), pages 413-450, July.
    6. Amélie BARBIER-GAUCHARD & Francesco De PALMA & Thierry BETTI, 2020. "Monetary policy with weakened unions," Working Papers of BETA 2020-26, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    7. Charles S. Bos & Siem Jan Koopman & Marius Ooms, 2007. "Long memory modelling of inflation with stochastic variance and structural breaks," CREATES Research Papers 2007-44, Department of Economics and Business Economics, Aarhus University.
    8. John T. Addison, 2016. "Collective bargaining systems and macroeconomic and microeconomic flexibility: the quest for appropriate institutional forms in advanced economies," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-53, December.
    9. Taniya Ghosh & Yadavindu Ajit, 2023. "Central bank transparency, the role of institutions and inflation persistence," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2023-012, Indira Gandhi Institute of Development Research, Mumbai, India.
    10. Ciżkowicz, Piotr & Rzońca, Andrzej, 2013. "Does inflation harm corporate investment? Empirical evidence from OECD countries," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 7, pages 1-38.
    11. Dudley Cooke, 2010. "Openness and Inflation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(2‐3), pages 267-287, March.
    12. Tahir Mukhtar, 2010. "Does Trade Openness Reduce Inflation? Empirical Evidence from Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 15(2), pages 35-50, Jul-Dec.
    13. Magali Jaoul-Grammare & Isabelle Terraz, 2010. "Syndicalisation et croissance économique : y a-t-il une exception française ?," Working Papers of BETA 2010-25, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    14. Colombo, Emilio & Tirelli, Patrizio & Visser, Jelle, 2014. "Reinterpreting social pacts: Theory and evidence," Journal of Comparative Economics, Elsevier, vol. 42(2), pages 358-374.
    15. Christoph S. Weber, 2018. "Central bank transparency and inflation (volatility) – new evidence," International Economics and Economic Policy, Springer, vol. 15(1), pages 21-67, January.
    16. Lucotte, Yannick & Pradines-Jobet, Florian, 2023. "The inflation loop is not a myth," Finance Research Letters, Elsevier, vol. 55(PB).
    17. Arno Hantzsche & Simon Savsek & Sebastian Weber, 2018. "Labour Market Adjustments to Financing Conditions under Sectoral Rigidities in the Euro Area," Open Economies Review, Springer, vol. 29(4), pages 769-794, September.
    18. Ciżkowicz, Piotr & Rzońca, Andrzej, 2010. "Inflation and corporate investment in selected OECD countries in the years 1960-2005 – an empirical analysis," MPRA Paper 29846, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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