| Abstract: | The model developed in this paper asserts that unions attach greater weight to the wishes of older workers than they do to the wishes of young workers, and wages and employment are determined by efficient bargains. Then, the wages of old workers are always higher than the wages of young workers regardless of productivity and relative supply. Employment is influenced mainly by outside opportunities. In the plausible case where old workers cannot easily get senior jobs outside their firm, junior unemployment is higher than senior unemployment. A seemingly robust result is that an increase in the ratio of old to young workers (population aging) reduces the unemployment rate and wage rate of both groups in the population. |
