INDUSTRIAL RELATIONS AND THE SENIORITY MODEL OF UNION BEHAVIOUR
| DOI | http://doi.org/10.1111/j.1468-0084.1988.mp50001004.x |
| Date | 01 February 1988 |
| Published date | 01 February 1988 |
OXFORD BULLETIN OF ECONOMICS AND STATISTICS, 50, 1(1988)
0305-9049 $3.00
INDUSTRIAL RELATIONS AND THE
SENIORITY MODEL OF UNION BEHAVIOUR
Peter J. Turnbull
I. INTRODUCTION: THE ECONOMIC THEORY OF UNION BEHAVIOUR
After being an underdeveloped, if not an entirely neglected, area of economic
research for almost 40 years, there has recently been a resurgence of interest
in the economic theory of trade union behaviour. Indeed, the economics
journals are now replete with theoretical and empirical models of trade
union behaviour (see Oswald, 1985 and Pencavel, 1985 respectively for
reviews and references on the theoretical and empirical literature). In the
most recent survey paper Oswald argued that 'We now appear to be a little
closer to a situation in which it could be said that there is an orthodox,
methodologically conventional and testable theory of the trade union' (1985:
160-1, cf. Johnson, 1975: 23-4). Although there is still some debate about
precisely 'what unions maximize' (Freeman and Medoff, 1984; Hirsch and
Addison, 1986), and some disquiet about the fact that many of the apparent
'agreements' in model building owe something of their popularity to the
mathematical tractability and theoretical convenience of certain simplifying
assumptions (Johnson 1985; Pencavel, 1985), the general position in the
literature would appear to be that these problems can be resolved by testing
the empirical relevance of various research hypotheses against observed
labour market behaviour (Dertouzos and Pencavel, 1981: 116-3; Pencavel,
1985: 205; Johnson, 1985: 195; Hirsch and Addison, 1986:18).
Empirical studies of trade union behaviour have proliferated in recent
years, but these studies have simply imposed a particular structure on the
union's utility function and then applied the (untested) hypothesis to the
objectives of particular unions.1 Consequently, 'beyond the fact that some
very simple forms of trade union objective function appear to be inconsistent
with the evidence, not much more is known about the precise form of this
function' (Pencavel, 1985: 208). A number of more recent studies, however,
have begun the more difficult task of testing between alternative models of
union behaviour, examining whether such hypotheses conform to observed
labour market behaviour.2 The first test for European data recently appeared
'Recent studies include Farber (1978), Dertouzos and Pencavel (1981), Pencavel (1984), and
Carruth and Oswald (1985).
2See, for example, Card (1985), Brown and Ashenfelter (1986), Eberts and Stone (1986),
MaCurdy and Pencavel (1986), and Bean and Turnbull (1987).
53
54 BULLETIN
in the BULLETIN (Carruth, Oswald and Findlay, 1986), in which the authors
tested the seniority or flat indifference curve (FIC) model for the British coal
and steel industries.
The coal and steel study is of particular interest because the seniority/FIC
model of union behaviour (Oswald, 1984, 1985) attempts to address directly
the fact that union members may be differentiated by such important charac-
teristics as age and seniority, that union members may accordingly have con-
flicting preferences, and that the union itself may not treat all its members
identically. Unfortunately, there are a number of crucial omissions in the
model with respect to its industrial relations assumptions. In conjunction with
several oversimplifications about the structure and decision making pro-
cesses of trade unions, these omissions not only render the theoretical and
empirical application of the model problematic but also nullify both the
generic significance of the model and the claim by Carruth et aL (1986) that
the model was rejected for coal and steel because both are 'special industries'.
At a more general level, a critique of the seniority/FIC model illustrates
the problems of employing only a partial synthesis between labour economics
and industrial relations. It is precisely because many labour economists
regard industrial relations as simply a descriptive discipline, concerned
merely with 'what unions do in the world' (Oswald, 1985: 186; see also
Hirsch and Addison, 1985), that they have failed to glean the full potential of
interdisciplinary research on trade unions, and succeeded only in enhancing
the descriptive capacity of economic models. Even in this respect, however,
the seniority/FIC model inadequately accounts for observed union behaviour
because the model assumes that such behaviour can be completely described
by the written contents of collective agreements, without any references to, or
evaluation of, actual labour-management practices.
The theoretical foundations of the seniority/FIC model are critically
evaluated in Section II. Section III focuses on the particular stylized fact on
which the model is based, namely that workers are laid-off or made redund-
ant according to the principle of inverse seniority. This section illustrates that
there is in fact no empirical foundation for flat union indifference curves on
the basis of inverse seniority. The empirical test of the model for the coal and
steel industries is then re-evaluated in the light of this critique (Section 1V),
reinforcing the argument that the model is inappropriate not only for the coal
and steel industries but also for any unionized industry. The final section
explores the potential for a synthesis of labour economics and industrial rela-
tions, indicating a number of potential routes towards a more successful
analysis of trade union behaviour.
II. THE SENIORITY OR FLAT INDIFFERENCE CURVE MODEL OF
UNION BEHAVIOUR
As Oswald (1984, 1985) has argued, it is difficult to reconcile either the
'monopoly' model or the 'efficient contract' model with the realities of
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