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Insiders and Outsiders in Union

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  • Sanfey, Peter J

Abstract

This paper examines the importance of distinguishing between 'insiders' and 'outsiders' in models of union-firm bargaining. In general, insiders are those workers already established in the firm, while outsiders are either unemployed or working in temporary, low-security jobs. Modifying traditional union models to take account of this distinction is straightforward in one-period models, where the union is assumed to be indifferent to the welfare of outsiders, but is much more complicated in dynamic models. Some of the predictions of insider-outsider models concerning wage rigidity and unemployment are not robust. However, the prediction that wages will depend on both insider and outsider forces is robust and appears to be supported by the empirical evidence. Furthermore, evidence from the U.S. suggests that insider power should not be viewed as a purely union phenomenon. Copyright 1995 by Blackwell Publishers Ltd

Suggested Citation

  • Sanfey, Peter J, 1995. "Insiders and Outsiders in Union," Journal of Economic Surveys, Wiley Blackwell, vol. 9(3), pages 255-284.
    • Handle: RePEc:bla:jecsur:v:9:y:1995:i:3:p:255-84
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    Citations

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    Cited by:

    1. Lindbeck, Assar & Snower, Dennis J., 2002. "The Insider-Outsider Theory: A Survey," IZA Discussion Papers 534, Institute of Labor Economics (IZA).
    2. Assar Lindbeck & Dennis J. Snower, 2001. "Insiders versus Outsiders," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 165-188, Winter.
    3. Stennek, Johan, 2012. "Why Unions Reduce Wage Inequality, I - A Theory of Domino Effects," Working Papers in Economics 539, University of Gothenburg, Department of Economics, revised Jun 2015.
    4. De Paola, Maria & Scoppa, Vincenzo, 2003. "Family ties and training provision in an insider-outsider framework," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 32(2), pages 197-217, May.
    5. Cruz, Tassia, 2018. "Teacher hiring decisions: How do governments react to an exogenous redistribution of education funds?," Economics of Education Review, Elsevier, vol. 67(C), pages 58-81.
    6. Laszlo Goerke, 2006. "Earnings‐related Severance Pay," LABOUR, CEIS, vol. 20(4), pages 651-672, December.
    7. Schirwitz, Beate & Dittrich, Marcus, 2006. "A Dynamic Model of Union Behaviour. The Role of an Endogenous Outside Option and Bargaining Centralisation," Dresden Discussion Paper Series in Economics 07/06, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    8. Natália Monteiro & Miguel Portela & Odd Straume, 2011. "Firm Ownership and Rent Sharing," Journal of Labor Research, Springer, vol. 32(3), pages 210-236, September.
    9. Chang, Juin-jen & Lai, Ching-chong, 1997. "Union membership and employment dynamics with endogenous union density," Economics Letters, Elsevier, vol. 57(1), pages 119-125, November.
    10. Carneiro, Francisco G., 1998. "Productivity effects in brazilian wage determination," World Development, Elsevier, vol. 26(1), pages 139-153, January.
    11. repec:eee:labchp:v:3:y:1999:i:pc:p:2985-3028 is not listed on IDEAS
    12. Frank Scharr, 2005. "Tarifbindung, Rententeilung und Konzessionsverträge als Einflussgrößen der Lohnhöhe in Unternehmen : eine Untersuchung mit Mikrodaten für thüringische Firmen," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 39.
    13. Dobbie, Michael, 2006. "Insider Power, Outsider Ineffectiveness and Product Market Competition: Evidence from Australia," Review of Applied Economics, Lincoln University, Department of Financial and Business Systems, vol. 2(1), pages 1-19.

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