DP1007 Seniority, Earnings and Unions

Author(s): Alison L Booth, Jeff Frank
Publication Date: July 1994
Keyword(s): Discriminating Monopoly Union Models, Earnings, Incremental Wage Scales, Seniority, Trade Unions
JEL(s): J31, J33, J50, J51
Programme Areas: Human Resources
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1007

This paper uses a new data source to investigate whether wages rise more with seniority in unionized or non-unionized workplaces. The data distinguish workers who are covered by incremental wage scales with automatic progression by seniority. For union workers with seniority scales, the union wage differential increases with seniority. This is not the case for union workers without seniority scales. Taking account of this heterogeneity, we are able to reconcile previous paradoxical empirical findings. The results provide support for discriminating monopoly models of the trade union and have important efficiency and distributional implications.