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Seniority and Distribution in a Two-Worker Trade Union

Author

Listed:
  • Peter Kuhn

    (University of Western Ontario)

  • Jacques Robert

    (SSHRC)

Abstract

Unlike existing models which rely heavily on assumptions regarding unions' distributional preferences, we present a very simple model in which union seniority-layoff rules and rising seniority-wage profiles result from optimal price discrimination against the firm. Surprisingly, even when cash transfers among union members are ruled out, unions' optimal seniority-wage profiles are likely to be completely unaffected by their distributional preferences because of a kink in the utility-possibility frontier. This suggests that the simple technology of price discrimination may play a key role, hitherto unappreciated, in explaining union policies that affect the relative wellbeing of different union members.

Suggested Citation

  • Peter Kuhn & Jacques Robert, 1988. "Seniority and Distribution in a Two-Worker Trade Union," Working Papers 615, Princeton University, Department of Economics, Industrial Relations Section..
    • Handle: RePEc:pri:indrel:235
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    Citations

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    Cited by:

    1. Böckerman, Petri & Skedinger, Per & Uusitalo, Roope, 2018. "Seniority rules, worker mobility and wages: Evidence from multi-country linked employer-employee data," Labour Economics, Elsevier, vol. 51(C), pages 48-62.
    2. 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.
    3. Lans Bovenberg & Coen Teulings, 2008. "Rhineland exit," CPB Discussion Paper 101, CPB Netherlands Bureau for Economic Policy Analysis.
    4. 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.
    5. Anja Deelen, 2011. "Wage-Tenure Profiles and Mobility," CPB Discussion Paper 198, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Pedro Portugal & John T. Addison, 2022. "Retrieving the Returns to Experience, Tenure, and Job Mobility from Work Histories," Working Papers w202221, Banco de Portugal, Economics and Research Department.
    7. Johan Den Hertog, 1999. "Reversed Solidarity in Pension Plans," European Journal of Law and Economics, Springer, vol. 7(3), pages 241-260, May.
    8. 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.
    9. Piekkola, Hannu, 2000. "Unobserved Human Capital and Firm-Size Premium," Discussion Papers 739, The Research Institute of the Finnish Economy.
    10. 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.
    11. Zwick, Thomas, 2011. "Seniority wages and establishment characteristics," Labour Economics, Elsevier, vol. 18(6), pages 853-861.
    12. 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.
    13. Alistair Munro & Bereket Kebede & Marcela Tarazona & Arjan Verschoor, 2019. "The Lion’s Share: An Experimental Analysis of Polygamy in Northern Nigeria," Economic Development and Cultural Change, University of Chicago Press, vol. 67(4), pages 833-861.
    14. Lans Bovenberg & Coen Teulings, 2008. "Rhineland exit," CPB Discussion Paper 101.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    15. Anja Deelen, 2012. "Wage-Tenure Profiles and Mobility," De Economist, Springer, vol. 160(2), pages 141-155, June.
    16. Nils Gottfries & Tomas Sjostrom, 2000. "Insider Bargaining Power, Starting Wages and Involuntary Unemployment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(4), pages 669-688, December.
    17. Martin A. van der Ende & Coenraad N. Teulings, 2001. "A Structural Model of Tenure and Specific Investments," CESifo Working Paper Series 532, CESifo.
    18. 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.
    19. Danziger, Leif & Katz, Eliakim, 1996. "A theory of sex discrimination," Journal of Economic Behavior & Organization, Elsevier, vol. 31(1), pages 57-66, October.
    20. 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.
    21. 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.
    22. repec:pri:indrel:dsp01cc08hf62w is not listed on IDEAS

    More about this item

    Keywords

    unions; seniority; wages; layoffs;
    All these keywords.

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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