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Economics

The academic literature shows substantial evidence that trade unions reduce economic inequality. The economist Joseph Stiglitz has asserted that, "Strong unions have helped to reduce inequality, whereas weaker unions have made it easier for CEOs, sometimes working with market forces that they have helped shape, to increase it." Evidence indicates that those who are not members of unions also see higher wages. Researchers suggest that unions set industrial norms as firms try to stop further unionization or losing workers to better-paying competitors. The decline in unionization since the 1960s in the United States has been associated with a pronounced rise in income and wealth inequality and, since 1967, with loss of middle class income. Right-to-work laws have been linked to greater economic inequality in the United States.

The Hoover Institution think tank has asserted that the economic inequality argument made in favor of trade unions "misfires on several fronts. Those high union wages could not survive in the face of foreign competition or new nonunionized firms. The only way a union can provide gains for its members is to extract some fraction of the profits that firms enjoy when they hold monopoly positions." The think tank has also asserted that the decline of trade unions in the United States "cannot drive widespread inequality for the entire population, which is also affected by a rise in the knowledge economy as well as a general aging of the population."

Research from Norway has found that high unionization rates lead to substantial increases in firm productivity, as well as increases in workers' wages. Research from Belgium also found productivity gains, although smaller. However, other research in the United States has found that unions can harm profitability, employment and business growth rates. UK research on employment, wages, productivity, and investment found union density improved all metrics - but only until a limit. Forming U-shaped curves, after an optimal density, more unionisation worsened employment, wages, etc. Research from the Anglosphere indicates that unions can provide wage premiums and reduce inequality while reducing employment growth and restricting employment flexibility. Some trade unions oppose approaches which increase productivity, such as automation.

In the United States, the outsourcing of labour to Asia, Latin America, and Africa has been partially driven by increasing costs of union partnership, which gives other countries a comparative advantage in labour, making it more efficient to perform labour-intensive work there. Trade unions have been accused of benefiting insider workers and those with secure jobs at the cost of outsider workers, consumers of the goods or services produced, and the shareholders of the unionized business. Economist Milton Friedman sought to show that unionization produces higher wages (for the union members) at the expense of fewer jobs, and that, if some industries are unionized while others are not, wages will tend to decline in non-unionized industries. Friedrich Hayek criticized unions in chapter 18 of his publication The Constitution of Liberty.

Trade unions frequently advocate for seniority-based compensation and against meritocracy.