In this paper, the authors estimate the effect of the financial conditions of firms on negotiated wage settlements and on employment using a sample of Canadian collective bargaining agreements from 1965 to 1983. They find that ordinary least squares estimates of the effect of quasi-rents per worker on wages are positive but very small. However, the authors find a much larger effect when they instrument quasi-rents with measures of foreign competition shocks. They conclude that standard estimates of rent-sharing based on contract data seriously understate the impact of product market competition on negotiated wage settlements. Copyright 1993, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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Volume (Year): 108 (1993) Issue (Month): 4 (November) Pages: 983-1014 Download reference. The following formats are available: HTML
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