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Redistributing through Unions

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Author Info

  • Federico Boffa

    (Northwestern University)

Abstract

The paper proposes a theoretical framework to analyze the contribution of the trade unions in the compensation schemes. The tendencies, observed in unionized sectors, towards compression of wages and towards an earning profile increasing with seniority are set into an equilibrium model. The driving force leading the unions to pursue the aforementioned wage structure is examined, and the three hypotheses of union benevolent with respect to all workers, benevolent with respect to its members, and ruled by the median worker are tested in various contexts that differ according to the outside option that the workers face. Some implications are then derived, regarding the redistribution operated by the union within a cohort and in favor of senior workers, and the effects of unions on productive efficiency and unemployment level I am indebted to prof. Taber for his support and his guidance, prof. Meyer and prof. Mortensen for valuable comments, and Fabio Braggion, David Lucca, Jakub Kastl, Salvatore Piccolo and Razvan Vlaicu for advices and suggestions. .

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File URL: http://128.118.178.162/eps/lab/papers/0402/0402002.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Labor and Demography with number 0402002.

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Length: 25 pages
Date of creation: 04 Feb 2004
Date of revision:
Handle: RePEc:wpa:wuwpla:0402002

Note: Type of Document - pdf; prepared on windowsXP; pages: 25
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Web page: http://128.118.178.162

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Keywords: Labor redistribution unions;

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  1. Peter A. Diamond & J. A. Mirrlees, 1968. "Optimal Taxation and Public Production," Working papers 22, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Freeman, Richard Barry & Kleiner, Morris M., 1990. "The Impact of New Unionization on Wages and Working Conditions," Scholarly Articles 4632238, Harvard University Department of Economics.
  3. Hibbs Jr., Douglas A. & Locking, HÃ¥kan, 2000. "Wage Dispersion and Productive Efficiency: Evidence For Sweden," Working Papers in Economics 21, University of Gothenburg, Department of Economics.
  4. David Austen-Smith & Michael Wallerstein, 2003. "Redistribution in a Divided Society," Discussion Papers 1362, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Agell, Jonas & Lommerud, Kjell Erik, 1992. "Union Egalitarianism as Income Insurance," Economica, London School of Economics and Political Science, vol. 59(235), pages 295-310, August.
  6. Pencavel, John H, 1984. "The Tradeoff between Wages and Employment in Trade Union Objectives," The Quarterly Journal of Economics, MIT Press, vol. 99(2), pages 215-31, May.
  7. Emmanuel Saez, 2000. "Optimal Income Transfer Programs: Intensive Versus Extensive Labor Supply Responses," NBER Working Papers 7708, National Bureau of Economic Research, Inc.
  8. Richard B. Freeman, 1978. "Unionism and the Dispersion of Wages," NBER Working Papers 0248, National Bureau of Economic Research, Inc.
  9. Oswald, Andrew J, 1982. "The Microeconomic Theory of the Trade Union," Economic Journal, Royal Economic Society, vol. 92(367), pages 576-95, September.
  10. Samuelson, P. A., 1986. "Theory of optimal taxation," Journal of Public Economics, Elsevier, vol. 30(2), pages 137-143, July.
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