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Seniority and Distribution in a Two-Worker Trade Union

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  • Peter Kuhn
  • Jacques Robert

Abstract

Unlike existing models that rely heavily on assumption regarding unions' distributional preferences, the authors present a simple model in which union seniority-layoff rules and rising seniority-wage profiles result from optimal price discrimination against the firm. Surprisingly, even when cash transfers among union members are ruled out, unions' optimal seniority-wage profiles are likely to be completely unaffected by their distributional preferences because of a kink in the utility-possibility frontier. This suggests that the simple technology of price discrimination may play a key role, hitherto unappreciated, in explaining union policies that affect the relative well-being of different union members. Copyright 1989, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Paper provided by Princeton University, Department of Economics, Industrial Relations Section. in its series Working Papers with number 615.

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Date of creation: Jul 1988
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Handle: RePEc:pri:indrel:dsp013r074t956

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Keywords: unions; seniority; wages; layoffs;

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