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ARE SENIORITY PRIVILEGES UNFAIR?

Published online by Cambridge University Press:  16 November 2004

AXEL P. GOSSERIES
Affiliation:
Fonds National de la Recherche Scientifique (Belgium) and Université Catholique de Louvain

Abstract

What should maximin egalitarians think about seniority privileges? We contrast a good-specific and an all-things-considered perspective. As to the former, inertia and erasing effects of a seniority-based allocation of benefits from employment are identified, allowing us to spot the categories of workers and job-seekers made involuntarily worse off by such a practice. What matters however is to find out whether abolishing seniority privileges will bring about a society in which the all-things-considered worst off people are better off than in the seniority rule's presence. An assessment of the latter's cost-reduction potential is thus needed, enabling us to bridge a practice taking place within a firm with its impact on who the least well off members of society are likely to be. Three accounts of the profitability of seniority privileges are discussed: the “(firm specific) human capital”, the “deferred compensation” and the “knowledge transfer” ones. The respective relevance of “good-specific” and “all-things-considered” analysis is discussed. It turns out that under certain circumstances, a maximin egalitarian case for seniority privileges could be made.

Senior: Do you know that they are planning layoffs? Of course, it is only fair that they lay-off the newcomers first! After all, I have been loyal to the company for many years.

Junior: Did I choose to be a newcomer?

Type
Essay
Copyright
© 2004 Cambridge University Press

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Footnotes

Many thanks to two anonymous referees, to P.-M. Boulanger, B. Cockx, C. Fabre, L. Jacquet, E. Lazear, I. Robeyns, G. Vallée, Y. Vanderborght, Ph. Van Parijs, V. Vansteenberghe and J. de Wispelaere for their help and critical comments. Earlier versions of this paper were presented in Louvain-la-Neuve, Ghent, Montevideo and London. I am very grateful to these audiences. Special thanks to G. Brennan for his extensive and extremely valuable comments on earlier drafts of this paper. The usual disclaimers apply.