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When Unions “Mattered†: The Impact of Strikes on Financial Markets, 1925–1937

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  • John Dinardo
  • Kevin F. Hallock

Abstract

This examination of the Stock Market's responsiveness to strikes looks specifically at strike actions that labor historians generally view as the major ones occurring in the United States in the years 1925–37. The authors find that strikes had large, negative effects on industry stock value. Longer strikes, violent strikes, strikes in which unions “won,†industry-wide strikes, strikes that led to union recognition, and strikes that led to large wage increases were associated with larger negative share price reactions than were other strikes. Much of the “news†generated by the typical strike seems to have been registered by the Stock Market very early in the strike. However, there were also some fairly large stock price reactions to news that could be fully revealed only at the end of a strike.

Suggested Citation

  • John Dinardo & Kevin F. Hallock, 2002. "When Unions “Mattered†: The Impact of Strikes on Financial Markets, 1925–1937," ILR Review, Cornell University, ILR School, vol. 55(2), pages 219-233, January.
    • Handle: RePEc:sae:ilrrev:v:55:y:2002:i:2:p:219-233
    DOI: 10.1177/001979390205500202
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    References listed on IDEAS

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    1. Nelson, Morton & Amoako-Adu, Ben & Smith, Brian, 1994. "Impact of labor strikes on equity values: Canadian evidence," Journal of Economics and Business, Elsevier, vol. 46(3), pages 153-165, August.
    2. Card, David & Olson, Craig A, 1995. "Bargaining Power, Strike Durations, and Wage Outcomes: An Analysis of Strikes in the 1880s," Journal of Labor Economics, University of Chicago Press, vol. 13(1), pages 32-61, January.
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    Cited by:

    1. Henry S Farber & Daniel Herbst & Ilyana Kuziemko & Suresh Naidu, 2021. "Unions and Inequality over the Twentieth Century: New Evidence from Survey Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(3), pages 1325-1385.
    2. Afik, Zvika & Haim, Roi & Lahav, Yaron, 2019. "Advance notice labor conflicts and firm value—An event study analysis on Israeli companies," Finance Research Letters, Elsevier, vol. 31(C).

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