productivity growth among covered firms. As floors rise, however, cushions are compressed, leading to an average pass-through rate of about 50%. In the context of the Great Recession (2008–2016), as part of the debt relief package, there were legislative changes that would reduce the coverage of sectoral bargaining. However, this effort largely failed. Nevertheless, significant downward real wage adjustments occurred within the existing bargaining system, which allowed for downward wage adjustment via reductions in real wage floors, reductions in real wage cushions and a reallocation of workers to lower wage floors.

When it comes to differences across workers, overall, unskilled workers tend to do better under industry-wide or economy-wide bargaining, whereas skilled workers gain more from company bargaining, especially where it allows for some individual pay bargaining. Multi-employer bargaining tends to offer more inclusive labor protection for vulnerable categories of workers, such as migrant workers, those in non-standard forms of employment and workers employed in small firms (International Labor Office, 2017). In other words, decentralized wage bargaining is associated with a wider wage distribution, while centralized bargaining is associated with a more compact wage distribution.

Further evidence of this is the fact that the specific level of unionization is negatively related to the level of wage inequality and inequality across different types of capital (Fortin et al., 2021; Farber et al., 2021; Azkarate-Askasua and Zerecero, 2022). Fortin et al. (2021) show that over the period from 1979–2017 de-unionization contributed to the rise in income inequality. Farber et al. (2021) focus on a wider time span (pre-1973, year in which household surveys start capturing union affiliation information) to show that the direct effect of unionization accounts for 46% of the decline in the 90–10 gap between 1936–1968 and 16% of its increase between 1968–2014. Azkarate-Askasua and Zerecero (2022) argue that unions (and collective bargaining) have a large distributional effect across different types of capital in the context of France, by showing that the labor share without unions would be reduced by almost 10 percentage points.

Some of the effect unions have on inequality arises via spillover effects and by the threat of non-organized workers unionizing. Fortin et al. (2021) find that over the period from 1979–2017, the threat effect doubled the contribution of de-unionization to the rise in wage inequality in the United States. For instance, in the case of men, the contribution of unions to the steady growth in the 90—50 gap over the entire 1979—2017 period goes from 20% to 40% when spillover effects are taken into account. These are similar findings to Farber et al. (2021), who focusing on a wider time span find important contributions of spillover effects to the non-covered sector via threat effects, and that spillover effects increase the role of unions in the change of inequality.

**The impact of unions and collective bargaining on productivity.** The evidence on the effect of collective bargaining on productivity is more limited than on living standards. Still, collective bargaining, its coverage, and the level of negotiation, have been found to impact efficiency and productivity.

The traditional view is that unions enhance worker productivity (and thus overall productivity) by increasing job security and lowering turnover. However, more recently the argument has shifted toward the idea that specific forms of collective bargaining, such as industry-wide collective 59