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Redistributing through Unions

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  • Federico Boffa

    (Northwestern University)

Abstract

The paper proposes a theoretical framework to analyze the contribution of the trade unions in the compensation schemes. The tendencies, observed in unionized sectors, towards compression of wages and towards an earning profile increasing with seniority are set into an equilibrium model. The driving force leading the unions to pursue the aforementioned wage structure is examined, and the three hypotheses of union benevolent with respect to all workers, benevolent with respect to its members, and ruled by the median worker are tested in various contexts that differ according to the outside option that the workers face. Some implications are then derived, regarding the redistribution operated by the union within a cohort and in favor of senior workers, and the effects of unions on productive efficiency and unemployment level I am indebted to prof. Taber for his support and his guidance, prof. Meyer and prof. Mortensen for valuable comments, and Fabio Braggion, David Lucca, Jakub Kastl, Salvatore Piccolo and Razvan Vlaicu for advices and suggestions. .

Suggested Citation

  • Federico Boffa, 2004. "Redistributing through Unions," Labor and Demography 0402002, EconWPA.
  • Handle: RePEc:wpa:wuwpla:0402002 Note: Type of Document - pdf; prepared on windowsXP; pages: 25
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    File URL: http://econwpa.repec.org/eps/lab/papers/0402/0402002.pdf
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    References listed on IDEAS

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    1. John H. Pencavel, 1984. "The Tradeoff Between Wages and Employment in Trade Union Objectives," The Quarterly Journal of Economics, Oxford University Press, vol. 99(2), pages 215-231.
    2. Hibbs, Douglas A, Jr & Locking, Hakan, 2000. "Wage Dispersion and Productive Efficiency: Evidence for Sweden," Journal of Labor Economics, University of Chicago Press, vol. 18(4), pages 755-782, October.
    3. David Austen-Smith & Michael Wallerstein, 2003. "Redistribution in a Divided Society," Discussion Papers 1362, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    4. Peter A. Diamond & J. A. Mirrlees, 1968. "Optimal Taxation and Public Production," Working papers 22, Massachusetts Institute of Technology (MIT), Department of Economics.
    5. 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.
    6. Emmanuel Saez, 2002. "Optimal Income Transfer Programs: Intensive versus Extensive Labor Supply Responses," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 1039-1073.
    7. Samuelson, P. A., 1986. "Theory of optimal taxation," Journal of Public Economics, Elsevier, vol. 30(2), pages 137-143, July.
    8. Oswald, Andrew J, 1982. "The Microeconomic Theory of the Trade Union," Economic Journal, Royal Economic Society, vol. 92(367), pages 576-595, September.
    9. Freeman, Richard B & Kleiner, Morris M, 1990. "The Impact of New Unionization on Wages and Working Conditions," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 8-25, January.
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    More about this item

    Keywords

    Labor redistribution unions;

    JEL classification:

    • J - Labor and Demographic Economics
    • J - Labor and Demographic Economics

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