The purpose of the analysis is to ascertain the extent to which the generalized decline in union density, as well as the erosion in centralized bargaining structures and developments in other labor institutions, has contributed to rising within-country inequality in the current globalization era. the paper finds that trade unionism and collective bargaining are no longer significantly associated with within-country inequality, except in the Central and Eastern European countries where the collapse of unions after the fall of the Berlin Wall seems to have contributed to greater inequality. The paper also finds that despite much talk about welfare state crisis, large welfare states (historically the result of labor’s power and mobilization capacity) still play an important redistributive role, at least in advanced countries.