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Seniority and Distribution in a Two-Worker Trade Union

Author

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  • Peter Kuhn
  • Jacques Robert

Abstract

Unlike existing models that rely heavily on assumptions regarding unions' distributional preferences, we present a simple model in which union seniority-layoff rules and rising seniority-wage profiles result from optimal price discrimination against the firm. Surprisingly, even when cash transfers among union members are ruled out, unions' optimal seniority-wage profiles are likely to be completely unaffected by their distributional preferences because of a kink in the utility-possibility frontier. This suggests that the simple technology of price discrimination may play a key role, hitherto unappreciated, in explaining union policies that affect the relative well-being of different union members.

Suggested Citation

  • Peter Kuhn & Jacques Robert, 1989. "Seniority and Distribution in a Two-Worker Trade Union," The Quarterly Journal of Economics, Oxford University Press, vol. 104(3), pages 485-505.
  • Handle: RePEc:oup:qjecon:v:104:y:1989:i:3:p:485-505.
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    File URL: http://hdl.handle.net/10.2307/2937807
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    Cited by:

    1. Böckerman, Petri & Skedinger, Per & Uusitalo, Roope, 2018. "Seniority rules, worker mobility and wages: Evidence from multi-country linked employer-employee data," Labour Economics, Elsevier, vol. 51(C), pages 48-62.
    2. Anja Deelen, 2012. "Wage-Tenure Profiles and Mobility," De Economist, Springer, vol. 160(2), pages 141-155, June.
    3. Gottfries, Nils & Sjostrom, Tomas, 2000. " Insider Bargaining Power, Starting Wages and Involuntary Unemployment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(4), pages 669-688, December.
    4. A. Bovenberg & Coen Teulings, 2009. "Rhineland exit?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(5), pages 710-726, October.
    5. Martin A. van der Ende & Coenraad N. Teulings, 2001. "A Structural Model of Tenure and Specific Investments," CESifo Working Paper Series 532, CESifo Group Munich.
    6. Dohmen, Thomas J. & Pfann, Gerard A., 2004. "Worker separations in a nonstationary corporate environment," European Economic Review, Elsevier, vol. 48(3), pages 645-663, June.
    7. Anja Deelen, 2011. "Wage-Tenure Profiles and Mobility," CPB Discussion Paper 198, CPB Netherlands Bureau for Economic Policy Analysis.
    8. Johan Den Hertog, 1999. "Reversed Solidarity in Pension Plans," European Journal of Law and Economics, Springer, vol. 7(3), pages 241-260, May.
    9. I. Sebastian Buhai & Miguel A. Portela & Coen N. Teulings & Aico van Vuuren, 2014. "Returns to Tenure or Seniority?," Econometrica, Econometric Society, vol. 82(2), pages 705-730, March.
    10. Matthias Messner & Mattias K. Polborn, 1999. "Information and Dynamic Adjustment in Life Insurance Markets," UWO Department of Economics Working Papers 9912, University of Western Ontario, Department of Economics.
    11. Nicholas Lawson, 2011. "Is Collective Bargaining Pareto Efficient? A Survey of the Literature," Journal of Labor Research, Springer, vol. 32(3), pages 282-304, September.
    12. Piekkola, Hannu, 2000. "Unobserved Human Capital and Firm-Size Premium," Discussion Papers 739, The Research Institute of the Finnish Economy.
    13. Danziger, Leif & Katz, Eliakim, 1996. "A theory of sex discrimination," Journal of Economic Behavior & Organization, Elsevier, vol. 31(1), pages 57-66, October.
    14. Paul Hek & Daniel Vuuren, 2011. "Are older workers overpaid? A literature review," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(4), pages 436-460, August.
    15. Zwick, Thomas, 2011. "Seniority wages and establishment characteristics," Labour Economics, Elsevier, vol. 18(6), pages 853-861.
    16. Kuhn, Peter & Sweetman, Arthur, 1999. "Vulnerable Seniors: Unions, Tenure, and Wages Following Permanent Job Loss," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 671-693, October.
    17. Coen N. Teulings & Martin A. van der Ende, 2000. "A Structural Model of Tenure and Specific Investments," Tinbergen Institute Discussion Papers 00-009/3, Tinbergen Institute, revised 30 Nov 2002.
    18. Alistair Munro & Bereket Kebede & Marcela Tarazona-Gomez & Arjan Verschoor, 2010. "The lion’s share. An experimental analysis of polygamy in Northern Nigeria," GRIPS Discussion Papers 10-27, National Graduate Institute for Policy Studies.

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