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Title: Seniority and Distribution in a Two-Worker Trade Union
Authors: Robert, Jacques
Kuhn, Peter
Keywords: unions
Issue Date: 1-Jul-1988
Citation: Quarterly Journal of Economics, Vol. 104, No. 3, August 1989
Series/Report no.: Working Papers (Princeton University. Industrial Relations Section) ; 235
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.
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