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Seniority and Distribution in a Two-Worker Trade Union

Peter Kuhn () and Jacques Robert
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Jacques Robert: SSHRC

No 615, Working Papers from Princeton University, Department of Economics, Industrial Relations Section.

Abstract: Unlike existing models which rely heavily on assumptions regarding unions' distributional preferences, we present a very 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 wellbeing of different union members.

Keywords: unions; seniority; wages; layoffs (search for similar items in EconPapers)
JEL-codes: D86 (search for similar items in EconPapers)
Date: 1988-07
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Journal Article: Seniority and Distribution in a Two-Worker Trade Union (1989) Downloads
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