Seniority and Distribution in a Two-Worker Trade Union

Author
Keywords
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.

Year of Publication
1988
Number
235
Date Published
07/1988
Publication Language
eng
Citation Key
Quarterly Journal of Economics, Vol. 104, No. 3, August 1989
URL
Working Papers