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Vulnerable Seniors: Unions, Tenure and Wages Following Permanent Job Loss

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Peter Kuhn
Arthur Sweetman

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Abstract

A well known finding in the literature on displaced workers is the apparent “portability” of tenure across firms: controlling for experience and other observable characteristics, workers with high levels of predisplacement tenure earn higher postdisplacement wages (e.g. Kletzer 1989). Using four data sets on displaced workers, we show that this finding is reversed for workers losing unionized jobs. Our finding cannot be explained by firm- or industry-specific human capital accumulation, deferred-pay policies, standard matching models, or by a correlation between tenure and re-entry rates into unionized jobs. We argue instead that it can reflect only two possible processes: negative selection of senior union workers, or a negative causal effect of unionism on workers’ alternative skills. An important implication of our findings is that, despite a much flatter predisplacement tenure-wage profile, displaced union workers’ wage losses increase with tenure at a comparable or higher rate to that of nonunion workers.

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Paper provided by McMaster University in its series Canadian International Labour Network Working Papers with number 20.

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Handle: RePEc:mcm:cilnwp:20

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  1. Ruhm, Christopher J, 1990. "Do Earnings Increase with Job Seniority?," The Review of Economics and Statistics, MIT Press, vol. 72(1), pages 143-47, February. [Downloadable!] (restricted)
  2. MaCurdy, Thomas E & Pencavel, John H, 1986. "Testing between Competing Models of Wage and Employment Determination in Unionized Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S3-S39, June. [Downloadable!] (restricted)
  3. 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. [Downloadable!] (restricted)
  4. Brown, James N & Ashenfelter, Orley, 1986. "Testing the Efficiency of Employment Contracts," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S40-S87, June. [Downloadable!] (restricted)
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  5. Pearce, James E, 1990. "Tenure, Unions, and the Relationship between Employer Size and Wages," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 251-69, April. [Downloadable!] (restricted)
  6. Addison, John T & Portugal, Pedro, 1989. "Job Displacement, Relative Wage Changes, and Duration of Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 7(3), pages 281-302, July. [Downloadable!] (restricted)
  7. Richard B. Freeman, 1982. "Union wage practices and wage dispersion within establishments," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 36(1), pages 3-21, October.
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  8. Katharine G. Abraham & Henry S. Farber, 1987. "Job Duration, Seniority, and Earnings," NBER Working Papers 1819, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Neal, Derek, 1995. "Industry-Specific Human Capital: Evidence from Displaced Workers," Journal of Labor Economics, University of Chicago Press, vol. 13(4), pages 653-77, October. [Downloadable!] (restricted)
  10. Green, D.A., 1991. "A Comparison of Estimation Approach for the Union-Nonunion Wage Differential," UBC Departmental Archives 91-13, UBC Department of Economics.
  11. Jones, Stephen R G & Kuhn, Peter, 1995. "Mandatory Notice and Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 13(4), pages 599-622, October. [Downloadable!] (restricted)
  12. Crossley, T.F., 1998. "What Can We Learn from Displaced Worker Data about the Returns to Tenure?," Papers 346, Australian National University - Department of Economics.
  13. Kuhn, Peter & Robert, Jacques, 1989. "Seniority and Distribution in a Two-Worker Trade Union," The Quarterly Journal of Economics, MIT Press, vol. 104(3), pages 485-505, August. [Downloadable!] (restricted)
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  14. Joseph G. Altonji & Nicolas Williams, 1997. "Do Wages Rise with Job Seniority? A Reassessment," NBER Working Papers 6010, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  15. Doiron, D.J. & Rddell, W.C., 1992. "The Impact of Unionization on Male-Female Earnings Differences in Canada," UBC Departmental Archives 92-30, UBC Department of Economics.
  16. Daniel Parent, 1995. "Industry-Specific Capital and the Wage Profile: Evidence from the NLSY and the PSID," Working Papers 729, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
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  17. Card, David, 1996. "The Effect of Unions on the Structure of Wages: A Longitudinal Analysis," Econometrica, Econometric Society, vol. 64(4), pages 957-79, July. [Downloadable!] (restricted)
  18. Farber, Henry S, 1983. "The Determination of the Union Status of Workers," Econometrica, Econometric Society, vol. 51(5), pages 1417-37, September. [Downloadable!] (restricted)
  19. Altonji, Joseph G & Shakotko, Robert A, 1987. "Do Wages Rise with Job Seniority?," Review of Economic Studies, Blackwell Publishing, vol. 54(3), pages 437-59, July. [Downloadable!] (restricted)
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  20. Freeman, Richard B, 1980. "The Exit-Voice Tradeoff in the Labor Market: Unionism, Job Tenure, Quits, and Separations," The Quarterly Journal of Economics, MIT Press, vol. 94(4), pages 643-73, June. [Downloadable!] (restricted)
  21. Lemieux, Thomas, 1998. "Estimating the Effects of Unions on Wage Inequality in a Panel Data Model with Comparative Advantage and Nonrandom Selection," Journal of Labor Economics, University of Chicago Press, vol. 16(2), pages 261-91, April. [Downloadable!] (restricted)
  22. Kletzer, Lori Gladstein, 1989. "Returns to Seniority after Permanent Job Loss," American Economic Review, American Economic Association, vol. 79(3), pages 536-43, June. [Downloadable!] (restricted)
  23. Topel, Robert H, 1991. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 145-76, February. [Downloadable!] (restricted)
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  24. repec:fth:prinin:350 is not listed on IDEAS
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. David Green & Thomas Lemieux, 2007. "The impact of unionization on the incidence of and sources of payment for training in Canada," Empirical Economics, Springer, vol. 32(2), pages 465-489, May. [Downloadable!] (restricted)
  2. Peter Haan & Michal Myck, 2009. "Dynamics of Poor Health and Non-Employment," SOEPpapers 195, DIW Berlin, The German Socio-Economic Panel (SOEP). [Downloadable!]
  3. Christopher J. O'Leary & Randall W. Eberts, 2007. "Reemployment and Earnings Recovery among Older Unemployment Insurance Claimants," Staff Working Papers 07-133, W.E. Upjohn Institute for Employment Research. [Downloadable!] (restricted)
  4. Haan, Peter & Myck, Michal, 2009. "Dynamics of Poor Health and Non-Employment," IZA Discussion Papers 4154, Institute for the Study of Labor (IZA). [Downloadable!]
  5. Mário Centeno & Márcio Corrêa, 2005. "Job Matching, Technological Progress And Worker-Provided On-The-Job Training," Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33th Brazilian Economics Meeting] 171, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]. [Downloadable!]
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