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The single-mindedness of labor unions when transfers are not Lump-Sum

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canegrati, emanuele

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Abstract

In this paper I analyse a labour market where the wage is endogenously determined according to an Efficient Bargaining process between a firm and a labour 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 one group for leisure are higher than those of the other group the latter suffers from higher tax rates and with lower level of wage rates and lower levels of leisure. Finally, since the former is more single-minded, it may exploit its greater political power in order to get a positive intergenerational transfer which takes place via labour income taxation. Empirical evidence from the WERS 2004 survey confirms main results of the model.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2320.

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Date of creation: 19 Mar 2007
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Handle: RePEc:pra:mprapa:2320

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Related research
Keywords: bargaining models labour unions labour-income taxation single-mindedness

Find related papers by JEL classification:
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation
H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends and Forecasts
J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped

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  7. Koskela, Erkki & Schob, Ronnie, 2002. " Optimal Factor Income Taxation in the Presence of Unemployment," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(3), pages 387-404. [Downloadable!] (restricted)
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  8. Casey B. Mulligan & Xavier Sala-i-Martin, 2003. "Social Security, Retirement, and the Single-Mindedness of the Electorate," NBER Working Papers 9691, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Lindbeck, Assar & Snower, Dennis, 2002. "The Insider-Outsider Theory: A Survey," IZA Discussion Papers 534, Institute for the Study of Labor (IZA). [Downloadable!]
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  17. 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. [Downloadable!] (restricted)
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