IDEAS home Printed from https://ideas.repec.org/p/gmf/wpaper/2006-02.html
   My bibliography  Save this paper

Does the Quality of Industrial Relations Matter for the Macro Economy? A Cross-Country Analysis Using Strikes Data

Author

Listed:
  • John T. Addison

    (University of South Carolina (U.S.A.), GEMF/Universidade de Coimbra (Portugal), and IZA (Germany))

  • Paulino Teixeira

    (GEMF and Faculdade de Economia, Universidade de Coimbra)

Abstract

Using international data, we investigate whether the quality of industrial relations matters for the macro economy. We measure industrial relations inversely by strikes – which proxy we cross-check with an industrial relations reputation indicator – and our macro performance outcome is the unemployment rate. Independent of the role of other institutions, good industrial relations do seem to matter: greater strike volume is associated with higher unemployment. Holding country effects constant, however, the sign of the variable is reversed. This fixed-effects result likely picks up a direct effect of strikes, namely, their tendency to rise when striking becomes more attractive to the union.

Suggested Citation

  • John T. Addison & Paulino Teixeira, 2006. "Does the Quality of Industrial Relations Matter for the Macro Economy? A Cross-Country Analysis Using Strikes Data," GEMF Working Papers 2006-02, GEMF, Faculty of Economics, University of Coimbra.
    • Handle: RePEc:gmf:wpaper:2006-02
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp1968.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Michèle Belot & Jan C. van Ours, 2004. "Does the recent success of some OECD countries in lowering their unemployment rates lie in the clever design of their labor market reforms?," Oxford Economic Papers, Oxford University Press, vol. 56(4), pages 621-642, October.
    2. Soskice, David, 1990. "Wage Determination: The Changing Role of Institutions in Advanced Industrialized Countries," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 6(4), pages 36-61, Winter.
    3. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages 1-33, March.
    4. John T. Addison, 2005. "The Determinants Of Firm Performance: Unions, Works Councils, And Employee Involvement/High‐Performance Work Practices," Scottish Journal of Political Economy, Scottish Economic Society, vol. 52(3), pages 406-450, July.
    5. Alan Harrison & Mark B. Stewart, 1993. "Strike Duration and Strike Size," Canadian Journal of Economics, Canadian Economics Association, vol. 26(4), pages 830-849, November.
    6. Juan C. Botero & Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "The Regulation of Labor," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(4), pages 1339-1382.
    7. Nickell, Stephen & Layard, Richard, 1999. "Labor market institutions and economic performance," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 46, pages 3029-3084, Elsevier.
    8. Casey Ichniowski, 1984. "Industrial Relations and Economic Performance Grievances and Productivity," NBER Working Papers 1367, National Bureau of Economic Research, Inc.
    9. Harry C. Katz & Thomas A. Kochan & Kenneth R. Gobeille, 1983. "Industrial Relations Performance, Economic Performance, and QWL Programs: An Interplant Analysis," ILR Review, Cornell University, ILR School, vol. 37(1), pages 3-17, October.
    10. Edward P. Lazear, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(3), pages 699-726.
    11. Steve Nickell & Jan van Ours, 2000. "The Netherlands and the United Kingdom: a European unemployment miracle?," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 15(30), pages 136-180.
    12. Alan B. Krueger & Alexandre Mas, 2004. "Strikes, Scabs, and Tread Separations: Labor Strife and the Production of Defective Bridgestone/Firestone Tires," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 253-289, April.
    13. Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
    14. Olivier Blanchard & Thomas Philippon, 2004. "The Quality of Labor Relations and Unemployment," NBER Working Papers 10590, National Bureau of Economic Research, Inc.
    15. John T. Addison & Claus Schnabel (ed.), 2003. "International Handbook of Trade Unions," Books, Edward Elgar Publishing, number 2705.
    16. Sue Fernie & David Metcalf, 1995. "Participation, Contingent Pay, Representation and Workplace Performance: Evidence from Great Britain," British Journal of Industrial Relations, London School of Economics, vol. 33(3), pages 379-415, September.
    17. 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.
    18. Morris M. Kleiner & Jonathan S. Leonard & Adam M. Pilarski, 1999. "Do Industrial Relations Affect Plant Performance?: The Case of Commercial Aircraft Manufacturing," NBER Working Papers 7414, National Bureau of Economic Research, Inc.
    19. Di Tella, Rafael & MacCulloch, Robert, 2005. "The consequences of labor market flexibility: Panel evidence based on survey data," European Economic Review, Elsevier, vol. 49(5), pages 1225-1259, July.
    20. William Hauk & Romain Wacziarg, 2009. "A Monte Carlo study of growth regressions," Journal of Economic Growth, Springer, vol. 14(2), pages 103-147, June.
    21. John T. Addison & Paulino Teixeira, 2003. "The Economics of Employment Protection," Journal of Labor Research, Transaction Publishers, vol. 24(1), pages 85-129, January.
    22. Ashenfelter, Orley & Johnson, George E, 1969. "Bargaining Theory, Trade Unions, and Industrial Strike Activity," American Economic Review, American Economic Association, vol. 59(1), pages 35-49, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. John T. Addison & Paulino Teixeira, 2009. "Are Good Industrial Relations Good for the Economy?," German Economic Review, Verein für Socialpolitik, vol. 10(3), pages 253-269, August.
    2. repec:rim:rimwps:28-07 is not listed on IDEAS
    3. MacLeod, W. Bentley, 2011. "Great Expectations: Law, Employment Contracts, and Labor Market Performance," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 18, pages 1591-1696, Elsevier.
    4. Andrea Bassanini & Romain Duval, 2006. "The Determinants of Unemployment across OECD Countries," Post-Print halshs-00120584, HAL.
    5. John T. Addison & Paulino Teixeira, 2009. "Are Good Industrial Relations Good for the Economy?," German Economic Review, Verein für Socialpolitik, vol. 10(3), pages 253-269, August.
    6. Tito Boeri & Jan van Ours, 2013. "The Economics of Imperfect Labor Markets: Second Edition," Economics Books, Princeton University Press, edition 1, number 10142.
    7. Kuddo, Arvo, 2009. "Labor laws in Eastern European and Central Asian countries : minimum norms and practices," Social Protection Discussion Papers and Notes 51698, The World Bank.
    8. Pierre, Gaëlle & Scarpetta, Stefano, 2004. "Employment Regulations through the Eyes of Employers: Do They Matter and How Do Firms Respond to Them?," IZA Discussion Papers 1424, Institute of Labor Economics (IZA).
    9. John Addison & Paulino Teixeira, 2005. "What Have We Learned about the Employment Effects of Severance Pay? Further Iterations of Lazear Et al," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(3), pages 345-368, September.
    10. Christoph S. Weber, 2020. "The unemployment effect of central bank transparency," Empirical Economics, Springer, vol. 59(6), pages 2947-2975, December.
    11. Almeida, Rita & Carneiro, Pedro, 2006. "Enforcement of Regulation, Informal Labour, Firm Size and Firm Performance," CEPR Discussion Papers 5976, C.E.P.R. Discussion Papers.
    12. Almeida, Rita K. & Carneiro, Pedro, 2005. "Enforcement of Regulation, Informal Labor and Firm Performance," IZA Discussion Papers 1759, Institute of Labor Economics (IZA).
    13. Eugeniusz Kwiatkowski & Przemysław Włodarczyk, 2012. "Wpływ prawnej ochrony zatrudnienia na rynek pracy w warunkach negatywnego szoku ekonomicznego," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 11-12, pages 1-23.
    14. Djankov, Simeon & Ramalho, Rita, 2009. "Employment laws in developing countries," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 3-13, March.
    15. Jahn, Elke J., 2005. "Wie wirkt der Kündigungsschutz? (What are the effects of employment protection?)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 38(2/3), pages 284-304.
    16. Alfonso Arpaia & Gilles Mourre, 2012. "Institutions And Performance In European Labour Markets: Taking A Fresh Look At Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 26(1), pages 1-41, February.
    17. Simon Sturn, 2011. "Labour market regimes and unemployment in OECD countries," IMK Working Paper 6-2011, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    18. Thomas Amossé & Philippe Askenazy & Martin Chevalier & Christine Erhel & Héloïse Petit & Antoine Rebérioux, 2016. "Industrial Relations and Firms’ Reactions to the Recession: A Comparative Micro-Econometric Analysis of France and Great Britain [Relations sociales et ajustements à la crise : une analyse micro-st," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-02172455, HAL.
    19. Djavad Salehi-Isfahani & Russell D. Murphy, 2006. "Labor market flexibility and investment in human capital," Working Papers e06-5, Virginia Polytechnic Institute and State University, Department of Economics.
    20. Belot, Michele & van Ours, Jan C., 2001. "Unemployment and Labor Market Institutions: An Empirical Analysis," Journal of the Japanese and International Economies, Elsevier, vol. 15(4), pages 403-418, December.
    21. Angel-Urdinola, Diego F. & Kuddo, Arvo, 2010. "Key characteristics of employment regulation in the Middle East and North Africa," Social Protection Discussion Papers and Notes 55674, The World Bank.

    More about this item

    Keywords

    strike rate/volume; quality of labor relations; labor market institutions; unemployment;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gmf:wpaper:2006-02. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sofia Antunes (email available below). General contact details of provider: https://edirc.repec.org/data/cebucpt.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.