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Union Egalitarianism as Income Insurance

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  • Agell, Jonas
  • Lommerud, Kjell Erik

Abstract

It is a common observation that unions often try to compress the wage distribution among their members as compared with the productivity distribution. A troublesome aspect of standard theories of redistributive unions is the question why high-productivity workers choose to enter the union in the first place. This paper develops and explores the implications of an alternative insurance rationale for egalitarian wage objectives. Apart from providing a simple explanation of why heterogeneous union members may agree on egalitarian wage policies, it also suggests a more guarded attitude toward the welfare costs of pay compression. Copyright 1992 by The London School of Economics and Political Science.

Suggested Citation

  • 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.
  • Handle: RePEc:bla:econom:v:59:y:1992:i:235:p:295-310
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