Working Paper: CEPR ID: DP1007
Authors: Alison L. Booth; Jeff Frank
Abstract: 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.
Keywords: seniority; incremental wage scales; trade unions; earnings; discriminating monopoly; union models
JEL Codes: J31; J33; J50; J51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Unionization with formal incremental wage scales (J50) | Steeper seniority wage profile (J31) |
| Unionization without seniority scales (J58) | No increase in earnings with seniority (J31) |
| Unionization with formal incremental wage scales (J50) | Increases union wage differential with seniority (J31) |
| Unionization without seniority scales (J58) | Decreases union wage differential with seniority (J31) |