Redistributing through Unions
AbstractThe 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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Date of creation: 04 Feb 2004
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