diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index d1ad5f6f732..c9b43c5626c 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -10551,7 +10551,11 @@ namespace ts {
                 }
                 if (type.flags & TypeFlags.Union) {
                     const unionContext = context || createWideningContext(/*parent*/ undefined, /*propertyName*/ undefined, (<UnionType>type).types);
-                    return getUnionType(sameMap((<UnionType>type).types, t => t.flags & TypeFlags.Nullable ? t : getWidenedTypeWithContext(t, unionContext)));
+                    const widenedTypes = sameMap((<UnionType>type).types, t => t.flags & TypeFlags.Nullable ? t : getWidenedTypeWithContext(t, unionContext));
+                    // Widening an empty object literal transitions from a highly restrictive type to
+                    // a highly inclusive one. For that reason we perform subtype reduction here if the
+                    // union includes empty object types (e.g. reducing {} | string to just {}).
+                    return getUnionType(widenedTypes, some(widenedTypes, isEmptyObjectType));
                 }
                 if (isArrayType(type) || isTupleType(type)) {
                     return createTypeReference((<TypeReference>type).target, sameMap((<TypeReference>type).typeArguments, getWidenedType));