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Strikes and Wages: A Test of an Asymmetric Information Model

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  • Card, David

Abstract

This paper describes a simple model of labor disputes based on the hypothesis that unions use strikes to infer the profitability of the firm. The model posits the existence of a negatively sloped resistance curve between wages and strike duration. In addition, it offers a series of predictions relating wage and strike outcomes to changes in the expected profitability of the firm and changes in the alternative opportunities of striking workers. These implications are tested using data on wage outcomes, strike probabilities, and strike durations for a large sample of collective bargaining agreements. Copyright 1990, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal Quarterly Journal of Economics.

Volume (Year): 105 (1990)
Issue (Month): 3 (August)
Pages: 625-59

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Handle: RePEc:tpr:qjecon:v:105:y:1990:i:3:p:625-59

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Cited by:
  1. Ludsteck, Johannes & Jacobebbinghaus, Peter, 2005. "Strike activity and centralisation in wage setting," IAB Discussion Paper 200522, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  2. Fabienne Tournadre & Marie-Claire Villeval, 2001. "Learning from Strike," CIRANO Working Papers 2001s-67, CIRANO.
  3. Gretlein, R. & Hamilton, J. & Slutsky, S., . "To fight or no to fight? That is the question," CORE Discussion Papers RP -1205, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Linda Babcock & George Loewenstein, 1997. "Explaining Bargaining Impasse: The Role of Self-Serving Biases," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 109-126, Winter.
  5. Kennan, John, 1995. "Repeated contract negotiations with private information," Japan and the World Economy, Elsevier, vol. 7(4), pages 447-472, November.
  6. Frank A.G. den Butter & Silvie Y. Koppes, 2003. "Strikes in France and the Netherlands; A Comparison of Labour Market Institutions," Tinbergen Institute Discussion Papers 03-087/3, Tinbergen Institute.
  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. Gary-Bobo, Robert J. & Jaaidane, Touria, 2008. "Strikes as the 'Tip of the Iceberg' in a Theory of Firm-Union Cooperation," CEPR Discussion Papers 6644, C.E.P.R. Discussion Papers.
  9. Butter, Frank A.G. den & Koppes, Silvie Y., 2003. "Strikes in France and the Netherlands; a comparison of labour market institutions," Serie Research Memoranda 0012, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  10. Kyle Hyndman, 2005. "Status Quo Effects in Bargaining: An Empirical Analysis of OPEC," Industrial Organization 0511016, EconWPA.
  11. Sergi Jimenez-Martin & José M. Labeaga & Mariluz Marco, 1996. "Algunos factores explicativos de la existencia de huelgas durante la negociación colectiva en España," Investigaciones Economicas, Fundación SEPI, vol. 20(2), pages 217-242, May.
  12. Kuhn, Peter & Gu, Wulong, 1998. "Centralization and strikes," Labour Economics, Elsevier, vol. 5(3), pages 243-265, September.
  13. Rudiger Ahrend & Antoine Goujard, 2012. "International Capital Mobility and Financial Fragility - Part 1. Drivers of Systemic Banking Crises: The Role of Bank-Balance-Sheet Contagion and Financial Account Structure," OECD Economics Department Working Papers 902, OECD Publishing.
  14. Gregory Finley, 2010. "Strike Lengths: Correcting for Prestrike Announcements and the Ratio of Bargaining Size to Firm Size," Journal of Labor Research, Springer, vol. 31(4), pages 307-321, December.
  15. Heifetz, Aviad & Segev, Ella, 2005. "Escalation and delay in protracted international conflicts," Mathematical Social Sciences, Elsevier, vol. 49(1), pages 17-37, January.
  16. Malo, Miguel A. & Sanchez-sanchez, Nuria, 2011. "The legal form of labour conflicts and their time persistence: an empirical analysis with a large firms' panel," MPRA Paper 30117, University Library of Munich, Germany.

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