Market Forces, Trade Union Ideology and Trends in Swedish Wage Dispersion

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Abstract
Compression of the distribution of relative wages was an important goal of Sweden's central confederation of blue-collar trade unions (LO) from the mid-1960s up to the breakdown of effective central wage formation in the early 1980s. In this article I analyze LO's success in achieving its ideology of wage equality in the market by companng observed wage dispersion trends to (i) the time path of human capital dispersion and (ii) the time path of wage dispersion built into the central framework wage agreements. I interpret the results of the comparisons as yielding strong evidence that egalitarian trade union ideology exerted powerful influence on the course of Swedish wage distribution.

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