Vulnerable Seniors Unions, Tenure and Wages Following Permanent Job Loss.pdf

Labour Market Outcomes: A Cross-National Study CILN is a collaberative research venture between the Social Sciences and Humanities Research Council (SSHRC) and McMaster University. Additional funding is provided by the University of British Columbia, the University of Toronto, Queens University, York University and Human Resources Development Canada (HRDC). McMaster University DEPARTMENT OF ECONOMICS Vulnerable Seniors: Unions, Tenure and Wages Following Permanent Job Loss Peter Kuhn 1 Arthur Sweetman 2 A well known finding in the literature on displaced workers is the apparent “portability” of tenure across firms: controlling for experience and other observable characteristics, workers with high levels of predisplacement tenure earn higher postdisplacement wages (e.g. Kletzer 1989). Using four data sets on displaced workers, we show that this finding is reversed for workers losing unionized jobs. Our finding cannot be explained by firm- or industry-specific human capital accumulation, deferred-pay policies, standard matching models, or by a correlation between tenure and re-entry rates into unionized jobs. We argue instead that it can reflect only two possible processes: negative selection of senior union workers, or a negative causal effect of unionism on workers’ alternative skills. An important implication of our findings is that, despite a much flatter predisplacement tenure-wage profile, displaced union workers’ wage losses increase with tenure at a comparable or higher rate to that of nonunion workers. McMaster University 1 University of Victoria 2 August 1998 Research on this paper was supported by the Social Sciences and Humanities Research Council of Canada. We thank seminar participants at McMaster, Australian National University, the University of Sydney, Royal Holloway College, University of Waterloo, Dartmouth College, and the University of Amsterdam for many criticisms and suggestions; we thank Richard Freeman, Chri