Labor Union Solidarity, Risk-Dependent Altruism, and Redistribution in Europe

• In Event: Labor, Identity, and Intergroup Relations

Abstract

Abstract:
In Europe, labor unions, despite representing wealthier and more secure unionized workers, actively lobby for redistribution and public insurance. Why do labor unions advocate for or oppose to welfare reform and social policy extension? I argue that labor unions' demands in reducing income and risk inequalities are shaped by the composition of the domestic labor movement. Labor union solidarity is driven by risk-dependent altruism, wherein workers with lower exposure to labor market risks advocate for redistribution, even when they may not directly benefit from it. However, the scope of labor solidarity is contingent on the presence and inclusiveness of low-income workers within the labor movement. In countries where labor unions exhibit high inclusiveness or have low aggregated union income premiums, their interests are all-encompassing, leading to strong demands for redistribution. Conversely, in countries with less inclusive labor movements and higher aggregated union income premiums, interests tend to be narrower, resulting in lower demands for redistribution. I test the risk-dependent altruism and group-composition effects hypotheses using data from the European Social Survey across 21 European countries spanning the years 2002 to 2018. The findings underscore the significant role of collective interests in shaping insurance-based redistributive demands within the European labor context.

Key Findings:
Risk-dependent altruism: interacting union membership with the relative risk of unemployment, I find that unionized workers with lower labor market risk exposure express a higher support for redistribution compared to their non-unionized counterparts. This union membership effect varies from 6.8 percent for individuals at the bottom of the risk distribution, gradually decreasing as relative risk exposure rises, ultimately disappearing at the top of the risk distribution where redistributive preferences converge between unionized and non-unionized workers.
Group composition effects: interacting union membership with relative risk of unemployment and group composition variables (low-income inclusiveness or union income premium), I discover that in countries characterized by high aggregated union premiums and low inclusiveness, risk-dependent altruism is minimal or even nonexistent. Conversely, in countries with low premiums and high inclusiveness, unionized workers' risk-based redistribution demands are notably higher.

Methodology:
The dependent variable consists of five ordered levels measuring support for government redistribution in a survey item. Consequently, all specifications are estimated using ordered probit models featuring country-specific intercepts and period dummies. In the post-estimation stage, I use the estimated models to compute the joint probability of support for redistribution and to simulate and visualize quantities of interest based on predicted probabilities and first differences between unionized and non-unionized workers.

Robustness tests:
To demonstrate that risk-dependent altruism indeed identifies demands for redistribution from an insurance perspective, I re-estimate the models of risk-dependent altruism with an alternative dependent variable that serves as a proxy for support for public insurance. Furthermore, I conduct estimations involving variables designed to account for self-selection into union membership and perform subsampling analyses using various sets of European countries to confirm the robustness of the main results.

Implications:
Risk-dependent altruism offers an alternative mechanism for understanding labor union solidarity, which may be more relevant than income-dependent altruism in the context of the average European labor union member who faces fewer labor market risks and enjoys a relatively higher income compared to non-unionized employees. However, the triple interactions involving group composition variables strongly suggest that this form of solidarity is contingent on sociotropic (collective) interests. To foster comprehensive solidarity, domestic labor movements must devise strategies to mobilize and organize low-income/skilled workers.

Future Research:
Future research should delve deeper into the origins of the union income premium in Europe. Although the measure employed is a naïve not adjusted aggregate estimate at the country level, it is puzzling to observe an income disparity between unionized and non-unionized workers in countries where collective bargaining operates at the sector level and collective agreements have extensive reach and coverage. Additionally, future research should focus on the coordination strategies employed by low-income labor unions within peak associations and the obstacles they encounter in disseminating their policy preferences and garnering support from labor unions representing high-income workers.

Author

• Ramses Llobet Bentarif