The health effects of wage setting institutions: How collective bargaining improves health but not because it reduces inequality.

ABSTRACT

Do wage-setting institutions, such as collective bargaining, improve health and, if so, is this because they reduce income inequality? Wage-setting institutions are often assumed to improve health because they increase earnings and reduce inequality and yet, while individual-level studies suggest higher earnings improve well being, the direct effects of these institutions on mortality remains unclear. This paper explores both the relationship between wage-setting institutions and mortality rates whether income inequality mediates this relationship. Using 50 years of data from 22 high-income countries (n ~ 825), I find mortality rates are lower in countries with collective bargaining compared to places with little or no wage protection. While wage-setting institutions may reduce economic inequality, these institutions do not appear to improve health because they reduce inequality. Instead, collective bargaining improves health, in part, because they increase average wage growth. The political and economic drivers of inequality may not, then, be correlated with health outcomes, and, as a result, health scholars need to develop more nuanced theories of the political economy of health that are separate from but in dialogue with the political economy of inequality.