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A Nonuniform Pricing Model of Union Wages and Employment

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Author Info
Kuhn, Peter

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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.

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Publisher Info
Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 96 (1988)
Issue (Month): 3 (June)
Pages: 473-508
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Handle: RePEc:ucp:jpolec:v:96:y:1988:i:3:p:473-508

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  1. 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. [Downloadable!]
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  2. 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.. [Downloadable!]
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  3. Bovenberg, Lans & Teulings, Coen, 2008. "Rhineland Exit?," IZA Discussion Papers 3626, Institute for the Study of Labor (IZA). [Downloadable!]
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  4. Dohmen, Thomas J. & Pfann, Gerard A., 2000. "Worker Separations in a Nonstationary Corporate Environment," IZA Discussion Papers 201, Institute for the Study of Labor (IZA). [Downloadable!]
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  5. Peter Kuhn & Arthur Sweetman, . "Vulnerable Seniors: Unions, Tenure and Wages Following Permanent Job Loss," Canadian International Labour Network Working Papers 20, McMaster University. [Downloadable!]
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  6. repec:fth:prinin:235 is not listed on IDEAS
  7. Matthias Messner & Mattias K. Polborn, 1999. "Information and Dynamic Adjustment in Life Insurance Markets," UWO Department of Economics Working Papers 9912, University of Western Ontario, Department of Economics. [Downloadable!]
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  8. Buhai, Ioan Sebastian & Portela, Miguel & Teulings, Coen N & van Vuuren, Aico, 2008. "Returns to Tenure or Seniority?," CEPR Discussion Papers 6933, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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