Quarterly Journal of Economics Vol. 104 No. 3 1989
Seniority and Distribution in a Two-Worker Trade Union
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.
- DOI
- 10.2307/2937807
- Volume
- 104
- Issue
- 3
- Pages
- 485
- Sources
- openalex crossref