I've looked at graphs like this many times over the past few years:
One of the things that I notice in that chart is that countries that are reputed to have strong union movements have market inequality outcomes that don't appear to be all that much better than those with weaker union movements.
So this post offers some cross-country evidence about the empirical link between unionisation and inequality. All data are taken from the OECD. The inequality measure is the Gini coefficient, which means that this post has nothing to say about 'top end' income concentration. (See here for why I think the distinction is important.)
You can see a negative relationship between union membership and inequality, but there are a couple of reasons why you'd be skeptical about drawing a line through that scatter plot. The first is that Iceland would play a larger role that one would think it should. Secondly, what is going on with France and a union density that is less than the US? You hear a lot about the weakening power of unions in the US, but not really so much in France.
It turns out that while union density is low in France, the share of workers covered by collective agreements is high. It seems to me that union coverage - the share of workers who are covered by collective agreements - is a better measure of union influence than union density:
I don't see much of a link between union coverage and inequality there.
Those two graphs are in levels, but the story of the last 20 years or so has been about changes in inequality. If higher unionisation doesn't necessarily mean lower levels of inequality, may it leads to smaller increases in inequality. Unfortunately, the OECD only have long time series data for Gini coefficients for only a handful of coutries.
(The 1990 numbers for Finland and Norway are the averages for 1986 and 1995.) With a couple of exceptions - the Netherlands and New Zealand - the patterns of changes are roughly similar. Here are the *changes* in the Gini coeffiencts since 1990 plotted against *levels* of unionisation in 1990:
Looking at those two charts, it's hard to tell a story in which a strong union presence significantly attenuated increases in inequality.
At this point, it's worth asking why we would expect a stronger union presence to be associated with more equal market outcomes in the first place. I don't think there's much doubt that unions would be a force for equality *within* a given occupation. But it's less obvious that increased unionisation would reduce the earnings gaps between different occupations.
There's a 2004 NBER paper by David Card, Thomas Lemieux and Craig Riddell that looks at the relationship between changes in unionisation and changes in inequality in Canada, the US and the UK. They find that the 'within-group' effect dominates the 'between-group' effect for men, but not for women. This is broadly consistent with the OECD data on changes in unionisation and changes in equality in those three countries: union densities and coverage fell and Gini coefficients increased.
Union densities fell in the countries in this graph, and with exceptions of the Netherlands and New Zealand (in which union density fell by some 40 percentage points), inequality increased:
But things are less clear when you plot changes in union coverage against changes in the Gini coefficient:
Increases in inequality were accompanied by declines in union coverage in Canada, the US, the UK and some other countries. But similar increases in inequality were accompanied by increased union coverage in Sweden, Norway and Finland.
I don't really see much of a link - either in theory or in the data - between unionisation rates and increases in inequality across occupations. (Inequality within an occupation is a different story.)