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A Nonuniform Pricing Model of Union Wages and Employment

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  • Kuhn, Peter

Abstract

Unlike implicit contracts models, the nonuniform pricing model of unions assumes that firms can always shut down ex post to avo id any payments to the union. Under this restriction, employment can differ from a first-best even if both workers and firms are risk neut ral. In general, the union chooses to offer quantity discounts on lab or and needs to use a seniority rule that regulates the order in whic h workers are hired to implement these discounts. Unions lower (almos t) all workers' employment probabilities and increase the cyclical vo latility of employment, and the union-nonunion average wage different ial will move countercyclically. Copyright 1988 by University of Chicago Press.

Suggested Citation

  • Kuhn, Peter, 1988. "A Nonuniform Pricing Model of Union Wages and Employment," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 473-508, June.
  • Handle: RePEc:ucp:jpolec:v:96:y:1988:i:3:p:473-508
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    Cited by:

    1. Lans Bovenberg & Coen N. Teulings, 2007. "Rhineland exit?," Tinbergen Institute Discussion Papers 07-101/3, Tinbergen Institute.
    2. 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.
    3. 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.
    4. Nicholas Lawson, 2010. "Is Collective Bargaining Pareto Efficient? A Survey of the Literature," Working Papers 1268, Princeton University, Department of Economics, Industrial Relations Section..
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. Danziger, Leif & Katz, Eliakim, 1996. "A theory of sex discrimination," Journal of Economic Behavior & Organization, Elsevier, vol. 31(1), pages 57-66, October.
    10. 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.
    11. 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.
    12. 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.
    13. repec:pri:indrel:dsp01cc08hf62w is not listed on IDEAS

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