Trade union density and social expenditure: a longitudinal analysis of policy feedback effects in OECD countries, 1980–2010

Two causal mechanisms have been invoked to explain the positive correlation between union membership and social expenditure. Unions try to influence policy, but they are also more successful in mobilizing members in economic systems in which actors engage in co-ordinated strategic interaction. Applying insights from the policy feedback and comparative capitalism literatures, our analysis indicates that union density is a determinant of social expenditure. A strong policy feedback effect is also present whereby social expenditure has a positive effect on union density. We find a positive effect of union density on social expenditure in co-ordinated market economies, but not in liberal market economies. We discuss the implications of these findings for citizens’ capacity to influence policy in varied contexts and for the ‘varieties of capitalism’ literature, and we close with some speculation about the implications of these findings in the current economic downturn.