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In this investigation, a political economy model of the labor market is proposed, where unions offer their (old and new) affiliates the combinations between the average real wage level and the standard deviation of wages or salaries. Globalization and other forces, however, have made it recently more difficult to the unions to pursue their policy in the backdrop of a declining union density. This has been established empirically for selected European countries. In an econometric exercise, we have also tested directly the impact of changes in real wages, minimum wage rate, and the effect of 90 to 10 decile ratio on the change in the degree of affiliation, which the unions were able to achieve in the recent past.

The paper first aims at showing that personal income distribution - at least after government intervention - tends to be a stationary variable for many European countries. This finding backs earlier results achieved by Ramser (1987). Furthermore, personal incomes follow a log-normal distribution, regardless of time and location. The authors set up a theoretical equilibrium concept for personal income distribution which is located in status theory and which can explain why a certain or likewise 'optimal' degree of inequality is warranted in the society. In the empirical section of the paper, the authors present an in-depth analysis of personal income distribution (before and after government intervention) in 17 European countries (2004-2012). Linear regression exercises - which make use of Gini coefficients 'ex-ante' and Gini coefficients 'ex-post' - show that the total sample can be clustered into three subgroups. The main group of 10 countries (Germany, Czech Republic, Denmark, Finland, Belgium, Slovenia, Estonia, France, Luxembourg and Austria) seems to have already achieved equilibrium in income distribution. The other two, smaller groups (the so-called 'GIIPS': Greece, Ireland, Italy, Portugal, Spain on the one hand and Poland and Slovakia on the other hand) seem to be on the way to let their personal income distribution converge towards equilibrium, either 'from below' or 'from above'.

Since the early Gestaltists there has been a strong interest in the question of how problem solvers get stuck in a mental impasse. A key idea is that the repeated activation of a successful strategy from the past results in a mental set ('Einstellung') which determines and constrains the option space to solve a problem. We propose that this phenomenon, which mostly was tested by fairly restricted experiments in the lab, could also be applied to more complex problem constellations and naturalistic decision making. We aim at scrutinizing and reconstructing how a mental set determines the misinterpretation of facts in the field of political decision making and leads in consequence to wrong expectations and an ill-defined problem representation. We will exemplify this psychological mechanism considering a historical example, namely the unexpected stabilization of the Franco regime at the end of World War II and its survival thereafter. A specific focus will be drawn to the significant observation that erroneous expectations were taken as the basis for decisions. This is congruent with the notion that in case of discrepancy between preconceived notions and new information, the former prevails over the new findings. Based on these findings, we suggest a theoretical model for expectation violation in political decision making and develop novel approaches for cognitive empirical research on the mechanisms of expectation violation and its maintenance in political decision making processes.