Globalization and the decline of unions

Labor unions have traditionally been an integral part of the welfare state, but union membership rates are declining across most developed countries, including Denmark, and there is little consensus about why. This project examines whether the decreasing prevalence of unions is due to globalization. We are particularly interested in the role that offshoring, or the relocation of production tasks abroad, plays.

Electricion without union

The results will provide insights into the future of organized labor, especially given the rapid pace of globalization. As workers navigate an increasingly challenging global economy, we are interested in whether they are simultaneously losing the organization that typically negotiates on their behalf. This will affect the distributional implications of globalization and can have important implications for governmental welfare programs and the sustainability of the welfare state as we know it today.


Using the administrative datasets of Danish firms and workers over a 20-year period, 1999-2018, the research team will investigate the link between offshoring, unionization rates and wage formation.

The researchers will draw on their lengthy experience working with this data to investigate offshoring issues. This data is particularly well-suited for our question because it contains union membership information at the individual worker-level, which is a significant improvement over industry or occupation measures that are common in the literature.

We also examine the importance of the centralization level of wage bargaining and how this influences the relationship between offshoring, unionization rates and rent sharing. Furthermore, there is detailed employer information that allows us to measure exogenous changes in the threat of offshoring at the firm-level.

We will complement the traditional measure of offshoring, which uses imports of intermediate inputs, with a newly available service-offshoring survey variable. An appealing feature of this new measure, is that it includes service sector firms and their service imports, which can then be incorporated into the analysis. These features of the data allow us to study the relationship between globalization and unions much more carefully than has previously been possible.

We will rely on a variety of empirical tools to carefully identify the causal effect of offshoring on unionization rates and rent sharing. This will include a decomposition exercise, a firm-level panel analysis, a worker-level panel analysis, a bargaining model, a rent-sharing specification, and instrumental variable techniques. Together these various econometric techniques will provide new insights into why labor unions are declining, and whether this is due to globalization.






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Jakob Roland Munch Professor Globalization; International Trade; Labor Economics; Migration; Emerging Markets Billede af Jakob Roland Munch

Funded by:

The Rockwool Foundation

Project: Globalization and the decline of unions
Period:  2021 - 2024


Principal Investigator Jakob Roland Munch

External members:

Name Title Phone E-mail
Jaerim Choi Assistant Professor E-mail
William W Olney Associate Professor E-mail