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A Nonuniform Pricing Model of Union Wages and Employment

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  • Kuhn, Peter

Abstract

Unlike implicit contracts models, the nonuniform pricing model of unions assumes that firms can always shut down ex post to avo id any payments to the union. Under this restriction, employment can differ from a first-best even if both workers and firms are risk neut ral. In general, the union chooses to offer quantity discounts on lab or and needs to use a seniority rule that regulates the order in whic h workers are hired to implement these discounts. Unions lower (almos t) all workers' employment probabilities and increase the cyclical vo latility of employment, and the union-nonunion average wage different ial will move countercyclically. Copyright 1988 by University of Chicago Press.

Suggested Citation

  • Kuhn, Peter, 1988. "A Nonuniform Pricing Model of Union Wages and Employment," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 473-508, June.
    • Handle: RePEc:ucp:jpolec:v:96:y:1988:i:3:p:473-508
    DOI: 10.1086/261548
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    Cited by:

    1. A. Bovenberg & Coen Teulings, 2009. "Rhineland exit?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(5), pages 710-726, October.
    2. Hiroyuki Ozaki & Peter A. Streufert, 2001. "Solutions For Some Dynamic Problems With Uncertainty Aversion," The Japanese Economic Review, Japanese Economic Association, vol. 52(3), pages 251-283, September.
    3. Kuhn, Peter & Sweetman, Arthur, 1999. "Vulnerable Seniors: Unions, Tenure, and Wages Following Permanent Job Loss," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 671-693, October.
    4. Lans Bovenberg & Coen Teulings, 2008. "Rhineland exit," CPB Discussion Paper 101.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    5. I. Sebastian Buhai & Miguel A. Portela & Coen N. Teulings & Aico van Vuuren, 2014. "Returns to Tenure or Seniority?," Econometrica, Econometric Society, vol. 82(2), pages 705-730, March.
    6. Arthur J. Hosios & Aloysius Siow, 2004. "Unions without rents: the curious economics of faculty unions," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 37(1), pages 28-52, February.
    7. Jäger, Simon & Heining, Jörg, 2019. "How Substitutable Are Workers? Evidence from Worker Deaths," MPRA Paper 109757, University Library of Munich, Germany, revised 01 Jan 2019.
    8. Martin A. van der Ende & Coenraad N. Teulings, 2001. "A Structural Model of Tenure and Specific Investments," CESifo Working Paper Series 532, CESifo.
    9. Nicholas Lawson, 2011. "Is Collective Bargaining Pareto Efficient? A Survey of the Literature," Journal of Labor Research, Springer, vol. 32(3), pages 282-304, September.
    10. Paul Hek & Daniel Vuuren, 2011. "Are older workers overpaid? A literature review," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(4), pages 436-460, August.
    11. Coen N. Teulings & Martin A. van der Ende, 2000. "A Structural Model of Tenure and Specific Investments," Tinbergen Institute Discussion Papers 00-009/3, Tinbergen Institute, revised 30 Nov 2002.
    12. Lans Bovenberg & Coen Teulings, 2008. "Rhineland exit," CPB Discussion Paper 101, CPB Netherlands Bureau for Economic Policy Analysis.
    13. Dohmen, Thomas J. & Pfann, Gerard A., 2004. "Worker separations in a nonstationary corporate environment," European Economic Review, Elsevier, vol. 48(3), pages 645-663, June.
    14. Arthur J. Hosios & Aloysius Siow, 2004. "Unions without rents: the curious economics of faculty unions," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 37(1), pages 28-52, February.
    15. Lans Bovenberg & Coen N. Teulings, 2007. "Rhineland exit?," Tinbergen Institute Discussion Papers 07-101/3, Tinbergen Institute.
    16. Danziger, Leif & Katz, Eliakim, 1996. "A theory of sex discrimination," Journal of Economic Behavior & Organization, Elsevier, vol. 31(1), pages 57-66, October.
    17. repec:pri:indrel:dsp01cc08hf62w is not listed on IDEAS

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