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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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    Cited by:

    1. Laszlo Goerke, 2006. "Earnings-related Severance Pay," LABOUR, CEIS, vol. 20(4), pages 651-672, December.
    2. 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.

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