Abstract
In this paper, a median voter model that recognizes the trade-off between higher wages and lower levels of employment is presented. It is argued that a seniority-based layoff rule creates the opportunity for mutually beneficial side-payments between older and younger workers. As a result, older workers reap more of the rents of unionization than do younger workers. The resulting distribution of union rents is found to be consistent with existing empirical evidence.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Atherton, Wallace N.Theory of Union Bargaining Goals. Princeton: Princeton University Press, 1973.
Barron, John M. and Dan A. Black. “Do Union Members Receive Compensating Wage Differentials? Comment.”American Economic Review 72 (September 1982): 864–67.
Blau, Francine D. and Lawrence M. Kahn. “Unionism, Seniority and Turnover.”Industrial Relations 22 (Fall 1983): 362–73.
Dunlop, John.Wage Determination Under Trade Unions. New York: Macmillan, 1944.
Farber, Henry S. “Individual Preferences and Union Wage Determination: The Case of the United Mine Workers.”Journal of Political Economy 88 (November 1978): 923–42.
Freeman, Richard B. “The Exit-Voice Tradeoff in the Labor Market: Unionism, Job Tenure, Quits, and Separations.”Quarterly Journal of Economics 94 (June 1980): 644–73.
_____ “The Effect of Unionism of Fringe Benefits.”Industrial and Labor Relations Review 34 (June 1981): 489–509.
_____ “Union Wages Practices and Wage Dispersions with Establishments.”Industrial and Labor Relations Review 36 (October 1982): 3–21.
_____ and James L. Medoff. “The Two Faces of Unionism.”Public Interest 57 (Fall 1979): 69–93.
Grossman, Gene M. “Union Wages, Temporary Layoffs, and Seniority.”American Economic Review 73 (June 1983): 277–90.
Johnson, George E. “Economic Analysis of Trade Unions.”American Economic Review 65 (May 1975): 23–28.
Long, James E. and Frank A. Scott. “The Income Tax and Nonwage Compensation.”Review of Economics and Statistics 64 (May 1982): 211–19.
Medoff, James L. “Layoffs and Alternative Under Trade Unionism in U.S. Manufacturing.”American Economic Review 69 (June 1979): 380–95.
Mincer, Jacob. “Union Effects: Wages, Turnover, and Job Training.” NBER Working Paper #808, 1981.
Musgrave, Richard and Peggy Musgrave.Public Finance in Theory and Practice. New York: Macmillan, 1976.
Parsley, C. J. “Labor Union Effects on Wage Gains: A Survey of the Recent Literature.”Journal of Economic Literature 38 (March 1980): 1–31.
Reynolds, Morgan O. “Whatever Happened to the Monopoly Theory of Labor Unions.”Journal of Labor Research 2 (Spring 1981): 163–73.
White, Michael D. “The Intra-Unit Wage Structure and Unions: A Median Voter Model.”Industrial and Labor Relations Review 35 (July 1982): 565–77.
Woodbury, Stephen A. “Substitution Between Wage and Nonwage Benefits.”American Economic Review 73 (March 1983): 66–81.
Author information
Authors and Affiliations
Additional information
We would like to thank Mike Baye and Gene Grossman for most useful comments on earlier versions of this paper. Any remaining errors, of course, are solely our responsibility.
Rights and permissions
About this article
Cite this article
Black, D.A., Parker, D.F. The division of union rents. Journal of Labor Research 6, 281–288 (1985). https://doi.org/10.1007/BF02685411
Issue Date:
DOI: https://doi.org/10.1007/BF02685411