From compression to dispersion: how union transformation reconfigures wage inequality in the knowledge economy

Abstract How do unions mediate wage inequality in knowledge economies marked by rising educational stratification? This article investigates how shifts in the educational composition of union membership shape union bargaining outcomes—particularly, the education premium, a key driver of contemporary wage dispersion. While union bargaining is often associated with wage compression, we argue that this association is contingent on intra-union membership dynamics. Drawing on original panel data for thirty-three advanced economies from 2002 to 2020, we find that unionization of tertiary-educated workers initially reduces the education premium. However, once the median union member is college-educated, union bargaining begins to increase the education premium. These findings suggest that unions, as evolving organizational actors, may shift from redistributive to stratifying institutions depending on membership composition. Cross-national variation—notably in Scandinavia and Japan—underscores how union capacity to integrate highly educated workers without losing traditional constituencies is central to wage inequality in post-industrial economies.