The Role of Workers' and Employers' Bargaining Power in 'Distributional Workplace Accounts'

Introduction

Social science explanations for rising inequality are incomplete in two significant ways. First, they commonly study income inequality through the narrow prism of earnings, overlooking key sources originating in the labor market, such as employee benefits and corporate profits.

Limitations of Current Research

Second, and related to the first, research on rising inequality is still frequently conducted at the individual or national levels, neglecting workplaces, and in particular power relations at work. Conflicts arise and compromises are forged not primarily at the national level but within specific institutional settings, including the workplace.

As a consequence of these two limitations, social science explanations of rising inequality neglect the complex fabric of workers’ and employers’ relative bargaining power, their multidimensionality and interdependence, and their resulting incomes.

Proposed Approach

I propose to formulate an original account of income inequality that is new in three ways:

1. By constructing what I refer to as “distributional workplace accounts” (DIWA), I plan to bring together for the first time all components of income – earnings, fringe benefits, and capital – of both employees and employers, at the workplace level.
2. Based on DIWA, I will estimate the first statistics on the scope and dynamics of the division of earnings, fringe benefits, capital, and total workplace income to different social or income classes.
3. I will develop a novel theory explaining the institutional, structural, and status-based mechanisms of workers’ and employers’ relative bargaining power.

Analysis and Contribution

Based on the new theory and an innovative empirical approach, I will analyze the relations between relative bargaining power and the income shares of different social and income classes.

The proposed project will make a significant contribution to the social science disciplines debating the upswing in inequality, and to public policy seeking to confront the resurgence of income inequality.