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Membership, Seniority and Wage-Setting in Democratic Labour Unions

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  • Burda, Michael C

Abstract

The dynamic behavior of a democratic monopoly labor union that allocates employment on a length-of-service basis is studied. In the context of a simple model, the author shows that a median voter equilibrium can exist in a union consisting of senority-ranked workers when voting membership depends on past employment. The closed-form wage rule of such a union induces a unit root in the autoregressive representation of employment even if the underlying determinants of labor demand are strictly stationary. On the other hand, "Chesire Cat" or disappearing union phenomena are likely to be limited by the forward-looking behavior of union members and the sensitivity of union membership to employment. Copyright 1990 by The London School of Economics and Political Science.

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Bibliographic Info

Article provided by London School of Economics and Political Science in its journal Economica.

Volume (Year): 57 (1990)
Issue (Month): 228 (November)
Pages: 455-66

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Handle: RePEc:bla:econom:v:57:y:1990:i:228:p:455-66

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Cited by:
  1. Ludsteck, Johannes, 2006. "Employment effects of centralization in wage setting in a median voter model," IAB Discussion Paper 200602, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  2. Daniele Checchi & Claudio Lucifora, 2002. "Unions and labour market institutions in Europe," Economic Policy, CEPR & CES & MSH, vol. 17(35), pages 361-408, October.
  3. Jonathan P. Thomas, 1999. "Fair Pay and a Wagebill Arguement for Wage Rigidity and Excessive Employment Variability," Discussion Paper Series, Department of Economics 9919, Department of Economics, University of St. Andrews.
  4. Fredriksson, Per G. & Gaston, Noel, 1999. "The "greening" of trade unions and the demand for eco-taxes," European Journal of Political Economy, Elsevier, vol. 15(4), pages 663-686, November.
  5. Gaston, N., 2000. "Unions and the Decentralisation of Collective Bargaining in a Globalising World," ISER Discussion Paper 0495, Institute of Social and Economic Research, Osaka University.
  6. Torben Andersen & Henrik Vetter, 1995. "Equilibrium youth unemployment," Journal of Economics, Springer, vol. 61(1), pages 1-10, February.
  7. Daniele Checchi, 2000. "Time series evidence on union densities in European countries," Departmental Working Papers 2000-10, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.

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