This paper studies strike from an economic perspective, explaining its determinants and the role it has on the bargaining power of workers. It develops an analytical framework which allows to study the effects of different strike regulations, a matter that acquired great relevance in Chile due to the recent process of labor reforms. Throughout the study, different theoretical points of view are considered to examine the evolution of the Chilean legislation with respect to the bargaining power that it has conferred to the workers. The insider-outsider model -whose original version had to be extended- is emphasized due to the possibilities it presented for an exhaustive analysis. This paper also includes a review of empirical studies and presents international legislative evidence about strike regulation in a group of countries with different degrees of development. We conclude that strengthening the bargaining power of workers by making it impossible to hire substitutes during the strike period and imposing no limits to its term (as it was originally proposed in the project presented by the Chilean Government), generally leads to better wages for the "insiders". Under normal conditions, however, this induces substitution away from labor and adversely affects the generation of future employment.
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Article provided by Instituto de Economía. Pontificia Universidad Católica de Chile. in its journal Cuadernos de Economía.
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