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The Single Mindedness Theory of Labor Unions

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  • canegrati, emanuele

Abstract

In this paper I analyse a labor market where the wage is endogenously determined according to a Right-to-Manage bargaining process between a firm and a labor union whose members are partitioned into two social groups: the old and the young. Furthermore, I exploit the Single Mindedness theory, which considers the existence of a density function which endogenously depends on leisure. I demonstrate that, when preferences of the old for leisure are higher than those of the young and when the level of productivity of the young is higher than that of the old, the young suer from higher tax rates and gain higher level of wage rates and lower levels of leisure. Finally, since the old are more single minded than the young, they exploit their greater political power to get positive transfers from the young in a PAYG system.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 1224.

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Date of creation: Dec 2006
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Handle: RePEc:pra:mprapa:1224

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Keywords: bargaining models; labor unions; political economy; single mindedness;

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  1. Summers, Lawrence H & Gruber, Jonathan & Vergara, Rodrigo, 1993. "Taxation and the Structure of Labor Markets: The Case of Corporatism," The Quarterly Journal of Economics, MIT Press, vol. 108(2), pages 385-411, May.
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  3. Hinich, M., 1976. "Equilibrium in Spatial Voting: The Median Voter Result is an Artifact," Working Papers 119, California Institute of Technology, Division of the Humanities and Social Sciences.
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  8. Manning, Alan, 1987. "An Integration of Trade Union Models in a Sequential Bargaining Framework," Economic Journal, Royal Economic Society, vol. 97(385), pages 121-39, March.
  9. Casey B. Mulligan & Xavier Sala-i-Martín, 2003. "Social security, retirement, and the single-mindedness of the electorate," Economics Working Papers 686, Department of Economics and Business, Universitat Pompeu Fabra.
  10. Chica Páez, Yolanda & Espinosa Alejos, María Paz, 2005. "Union Formation and Bargaining Rules in the Labor Market," DFAEII Working Papers 2005-07, University of the Basque Country - Department of Foundations of Economic Analysis II.
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  12. Paola Profeta, 2002. "Retirement and Social Security in a Probabilistic Voting Model," International Tax and Public Finance, Springer, vol. 9(4), pages 331-348, August.
  13. Erkki Koskela & Ronnie Schöb, 2002. "Optimal Capital Taxation in Economies with Unionised and Competitive Labour Markets," CESifo Working Paper Series 819, CESifo Group Munich.
  14. Erkki Koskela & Ronnie Schöb, 2000. "Optimal Factor Income Taxation in the Presence of Unemployment," CESifo Working Paper Series 279, CESifo Group Munich.
  15. Martin Feldstein & Jeffrey B. Liebman, 2001. "Social Security," NBER Working Papers 8451, National Bureau of Economic Research, Inc.
    • Feldstein, Martin & Liebman, Jeffrey B., 2002. "Social security," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324 Elsevier.
  16. Koskela, Erkki & Vilmunen, Jouko, 1996. "Tax progression is good for employment in popular models of trade union behaviour," Labour Economics, Elsevier, vol. 3(1), pages 65-80, August.
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