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How collective bargaining shapes poverty: New evidence for developed countries

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  • Kevin André Pineda-Hernández
  • François Rycx
  • Mélanie Volral

Abstract

Although many studies point to the significant influence of collective bargaining (CB) institutions on earnings inequalities, evidence on how these institutions shape poverty rates across developed economies remains surprisingly scarce. This paper explicitly addresses the relationship between CB systems and working-age poverty rates before and after taxes and transfers in 24 developed countries over the period 1990–2015. Our results show that countries with a more centralized CB system, a more extended bargaining coverage rate and/or a higher trade union density display significantly lower poverty rates. However, these results only hold in a post-tax benefit scenario. Controlling for country and time fixed effects and a wide range of covariates, our estimates indeed suggest that the poverty-reducing effect of CB institutions stems from the political strength of trade unions in promoting public social spending rather than from any direct effect on earnings inequalities. Sensitivity tests for endogeneity and overlapping samples support this conclusion.

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  • Kevin André Pineda-Hernández & François Rycx & Mélanie Volral, 2022. "How collective bargaining shapes poverty: New evidence for developed countries," ULB Institutional Repository 2013/346027, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:ulb:ulbeco:2013/346027
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    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation

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