For more than two decades, the power and organization of domestic unions have been identified as critical sources of diversity in national policy regimes and outcomes. In the 1970s Schmitter's discussion of corporatism initiated a sustained discussion of how different systems of “interest intermediation” in the advanced industrial democracies are organized (Schmitter 1979). This discussion eventually came to be focused on trade unions as one of the critical – if not the most critical – elements of such systems. Subsequently, differences in the strength and structure of the labor movement were identified as important factors explaining the social policy regime, the extent and character of industrial and other “supplyside” policies pursued by governments, and differences in macroeconomic performance (e.g., inflation, growth, unemployment) and the particular mixes of them. Particularly relevant for our present discussion, they were also shown to be associated with differences in how different national political economies responded to the economic shocks of the 1970s (Cameron 1984; Bruno and Sachs 1985; Lange and Garrett 1985; Alvarez, Garrett, and Lange, 1991).

This association between the strength and structure of organized labor, on the one hand, and responses to international change, on the other, has reappeared as research has come to focus on the effects of globalization on national economies since the beginning of the 1980s. Soskice (1998) maintains that trade union organizational variables are important (though not the only) features distinguishing “organized” and “liberal” market economies, and their characteristic responses to economic internationalization. Iversen (1998) has highlighted the continuing importance of trade union patterns in explaining the effects of central bank independence on economic performance.