Wage inequality: From profit rates to union power, evidence from Argentina

Abstract Income inequality is a structural feature in Argentina. This paper advances a relatively underexplored analytical framework that links sectoral disparities in profit rates to differences in union organisation and state intervention. We identify three interrelated dimensions: (a) uneven capital accumulation across sectors, captured by profit rates as an upper bound on wage growth; (b) workers’ collective organisation and bargaining capacity, which shape the extent to which this potential is realised; and (c) the role of the state as a contested arena in which distributive conflicts are mediated. Using panel data econometric models (2006–2019), we examine average wages across private economic sectors, accounting for sectoral profit rates, union strength, and minimum wage policies. Our findings reveal that wage inequality emerges from the interaction between capital’s drive for profit maximisation and workers’ responses through organisation, bargaining, and conflict.