The Effects of Unionisation on Labour Income Share in Developed Economies
Maria Praptiningsih (a*), Dyah Wulan Sari (b)

a) Economics Department, Faculty of Economics and Business, Airlangga University, Jalan Airlangga 4-6 Surabaya, Indonesia, School of Business and Management, Petra Christian University, Jalan Siwalankerto 121-131 Surabaya, Indonesia
* mia[at]petra.ac.id
b) Economics Department, Faculty of Economics and Business, Airlangga University, Jalan Airlangga 4-6 Surabaya, Indonesia

Abstract

The union plays a significant role in improving the labours welfare. The concern of the role of unions becomes a critical issue since it has prominent effects, not only to the improvement of workers benefits, but it is also related to the employers objectives. The unions have drawn more attention because they are typically bargaining over all aspects of an employment contract includes wages, working hours regulation, overtime pay, fringe benefits, employment security, and the coverage of health and safety standards in the working environment. Even though workers will only become members of a union organisation if it is considered to be profitable to do so, unions remain indispensable in enhancing the collective bargaining strength of labour towards the employers and concerning the labour market. According to the OECD, one of the key facts states that union membership in the OECD has declined significantly. Consequently, a significant challenge has emerged for unions in the past three decades.the advanced capitalist economies, union membership level has declined significantly, and there has been a narrowing of union interest and purpose. On the other hand, there is less comment and consideration of the challenges faced by unions in the former state-socialist societies and the changing societies of Africa, Asia and South America. Ultimately, this paper investigates the effects of unionisation on labour income share in developed economies. This study applies panel data of twenty-five developed countries and the time period of study is seven years annually covers from 2011 to 2017. The study analyses the following primary research question concerning labour income shares. Do the unionisation and other control variables have significant impact on labour income share. According to the model specification, there is a primary hypothesis that has been generated both as theoretically and empirically framework to be investigated. The hypothesis defines whether the trade unions has a positive and significant impact on labour income share through its membership and its role in improving collective bargaining coverage as one of the primary goals of trade unions.

Keywords: Labour Income Shares, Trade Unions, Collective Bargaining

Topic: Development economics