SENIORITY, EARNINGS AND UNIONS

This paper uses a new data source to investigate whether wages rise mo re with seniority in unionized or nonunionized workplaces. The data di stinguish establishments that have incremental wage scales with automa tic progression by seniority. For unions with seniority scales, the un ion wage differential is increasing with seniority. This is not the ca se for unions without seniority scales. Taking account of this heterog eneity, we are able to reconcile previous paradoxical empirical findin gs. The results provide support for discriminating monopoly models of the trade union and have important efficiency and distributional impli cations.