Solidaristic Wage Bargaining
81
eventually collapsed. While Solidaristic bar-
gaining was part of a wider social democratic
package that included substantial increases in
the coverage and generosity of welfare pro-
grams, the most important sources of sup-
port for Solidaristic bargaining came from
groups who benefitted directly. In principal,
the same egalitarian goals could have been
achieved with steeply progressive taxes and
targeted transfer payments instead of wage
equalization. In practice, political support
for an equivalent redistribution through
taxes and welfare would have been more dif-
ficult to obtain. As we argue below, solidaris-
tic bargaining was initially supported by
important actors who were opposed to redis-
tribution in general. When support for soli-
daristic bargaining was reduced to those who
welcomed its redistributive impact, the poli-
cy declined.
The political significance of solida-
ristic bargaining extends beyond the labor
market of the Nordic countries. The imple-
mentation of such a comprehensive equaliza-
tion of pre-tax incomes was a remarkable
achievement. Majority support for extensive
redistributive policies that benefit the least
well-off in society is not a common political
occurrence. An investigation into the sources
of support for Solidaristic bargaining in
Sweden and Norway can reveal more general
conditions that permit or block egalitarian
policies in other, less egalitarian societies.
We begin, in the next section, with a
brief discussion of why unions might seek to
reduce wage inequalities among their mem-
bers. In the following section, we describe
how decentralized and centralized wage-set-
ting differ in an economy characterized by
the continual exit of older, less efficient
enterprises and entry of new, more efficient
enterprises. This section contains our central
results concerning the efficiency and distri-
butional impact of Solidaristic bargaining.
Why the coalition in favor of Solidaristic bar-
gaining collapsed in the 1970s and 1980s is
discussed in the fourth section. In the fifth
section, we conclude with the implications
of our explanation of the rise and decline of
Solidaristic bargaining for the feasibility of
egalitarian policies in general.
Union Preference for Wage Equality
Why unions should support egalitarian wage
policies is not obvious. Freeman and Medoff
(1984) suggest three reasons why unions
might seek greater wage equality out of self-
interest. The first reason is that union prefe-
rences reflect the interests of the median
voter and, Freeman and Medoff argue, in
most cases the median wage earner receives a
wage below the mean. Yet unions that listen
only to the "voice" of the median union
member will soon lose members through
"exit". Confederal union leaders who wish to
follow redistributive policies favored by the
median union have to confront the problem
of preventing the departure of those workers
who are disadvantaged by an egalitarian wage
policy. Unlike the Austrian ÔGB, the natio-
nal union confederations in Scandinavia do
not have the authority to prevent affiliates
from leaving the centralized negotiations and
bargaining separately. Participation in cen-
tralized bargaining is voluntary. Moreover, in
both Norway and Sweden, blue-collar uni-
ons increasingly compete with white-collar
unions to retain the membership of highly
skilled manual workers as technological pro-
gress blurs the division between blue and
white collar work (Lash 1985). Unions that
ignore the interests of highly paid members
will lose those members to rival unions that
are less concerned with wage equality.
Freeman and Medoff s (1984)
second and third explanations of union sup-