Market Forces and Workers' Power Resources: A Comparative Study of Real Wage Growth in Advanced Capitalism

Using data from 14 countries over nearly a 40-year period, this study assesses the multifaceted determinants of real wage growth in advanced capitalism.  Neoclassical economics contends that wages track labor productivity, but theories in sociology suggest that workers “power resources” affect distributional outcomes, and hence should affect rates of wage growth as well.   Drawing on these ideas and others, the author argues that wage growth reflects not just gains in productivity, but a host of market and institutional factors that affect the relative bargaining power of firms and workers.  The hypothesized factors include globalization, unemployment, trade union strength, wage bargaining systems, and left-labor political power.  This argument is tested with panel regression techniques.  The results provide strong support for a power resource theory of wage determination and suggest that productivity growth does indeed increase real wages, but only if workers are sufficient organized to demand and receive a fair price for their labor-power.