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A Theory of Holdouts in Wage Bargaining

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  • Gu, Wulong
  • Kuhn, Peter

Abstract

Holdouts (the continuation of negotiations beyond the contract expiry date) are the most common form of disputes in labor contract negotiations. The authors model holdouts as a delaying tactic employed by unions to obtain information about other bargaining outcomes in their industry. Novel implications of their model include a positive association between holdout duration and the number of bargaining pairs negotiating contracts simultaneously; bunching of holdout durations within these 'negotiating groups'; and fewer strikes among holdouts which end later in groups. Using a large panel of contract negotiations in Canadian manufacturing, the authors find considerable support for these predictions. Copyright 1998 by American Economic Association.

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 88 (1998)
Issue (Month): 3 (June)
Pages: 428-49

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Handle: RePEc:aea:aecrev:v:88:y:1998:i:3:p:428-49

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Cited by:
  1. Sanchez-Pages, Santiago, 2009. "Bargaining and Conflict with Incomplete Information," SIRE Discussion Papers 2009-55, Scottish Institute for Research in Economics (SIRE).
  2. Louis Christofides & Amy Chen Peng, 2007. "Real Wage Chronologies," CESifo Working Paper Series 2096, CESifo Group Munich.
  3. Avouyi-Dovi, S. & Fougère, D. & Gautier, E., 2010. "Wage rigidity, collective bargaining and the minimum wage: evidence from French agreement data," Working papers 287, Banque de France.
  4. Peter Cramton & Joseph Tracy, 2003. "Unions, Bargaining and Strikes," Papers of Peter Cramton 02ubs, University of Maryland, Department of Economics - Peter Cramton, revised 05 Sep 2002.
  5. Sergi Jiménez-Martín & Jaume Garcia, 2010. "Initial offers and outcomes in wage bargaining: who wins?," Empirical Economics, Springer, vol. 39(3), pages 815-846, December.
  6. Cadigan, John & Schmitt, Pamela & Shupp, Robert & Swope, Kurtis, 2011. "The holdout problem and urban sprawl: Experimental evidence," Journal of Urban Economics, Elsevier, vol. 69(1), pages 72-81, January.
  7. Gary Charness & Peter J. Kuhn, 2010. "Lab Labor: What Can Labor Economists Learn from the Lab?," NBER Working Papers 15913, National Bureau of Economic Research, Inc.
  8. Kurtis Swope & Pamela Schmitt & John Cadigan & Robert Shupp, 2008. "An Experimental Study of the Holdout Problem in a Multilateral Bargaining Game," Departmental Working Papers 21, United States Naval Academy Department of Economics.
  9. Houba, Harold & Bolt, Wilko, 2000. "Holdouts, backdating and wage negotiations," European Economic Review, Elsevier, vol. 44(9), pages 1783-1800, October.
  10. Danziger, Leif, 2006. "Extension of Labor Contracts and Optimal Backpay," IZA Discussion Papers 2366, Institute for the Study of Labor (IZA).
  11. Louis Christofides & Chen Peng, 2006. "Major Provisions of Labour Contracts and their Theoretical Coherence," CESifo Working Paper Series 1700, CESifo Group Munich.
  12. Robert Rich & Joseph Tracy, 2011. "Early contract renegotiation: An analysis of U.S. labor contracts from 1970 to 1995," Staff Reports 521, Federal Reserve Bank of New York.
  13. Carlos Diaz-Moreno & Jose E. Galdon-Sanchez, 2000. "Collective Bargaining under Complete Information," STICERD - Theoretical Economics Paper Series 401, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  14. Amy Peng & Louis N. Christofides, 2009. "Real Wage Chronology," Working Papers 011, Ryerson University, Department of Economics.
  15. Drinkwater, Stephen & Latreille, Paul L. & Knight, Ben, 2008. "When It's (Mostly) the Taking Part that Counts: The Post-Application Consequences of Employment Tribunal Claims," IZA Discussion Papers 3629, Institute for the Study of Labor (IZA).

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