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Strikes and Wages: A Test of a Signalling Model

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Author Info
David Card

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Abstract

This paper describes a simple model of labor disputes based on the hypothesis that unions use strikes to infer the level of profitability of the firm. The implications of the model are then tested using data on wage outcomes, strike probabilities, and strike durations for a large sample of collective bargaining agreements. Negotiated wages are found to depend negatively on regional unemployment rates and positively on industry-specific selling prices. Contrary to the basic premise of the model, however, there is no evidence of a systematic relation between wages and strike outcomes. Increases in unemployment are found to decrease the probability of strikes, while increases in industry selling prices increase the probability of disputes. Strike durations are only weakly related to unemployment and industry prices, but are negatively correlated with industry output.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2550.

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Date of creation: Mar 1988
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Publication status: published as "Strikes and Wages: A Test of an Asymmetric Information Model," Quarterly Journal of Economics, Vol. 110, No. 3, pp. 625-659, (August 1990).
Handle: RePEc:nbr:nberwo:2550

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. repec:fth:prinin:215 is not listed on IDEAS
  2. Riddell, William Craig, 1979. "The Empirical Foundations of the Phillips Curve: Evidence from Canadian Wage Contract Data," Econometrica, Econometric Society, vol. 47(1), pages 1-24, January. [Downloadable!] (restricted)
  3. Gunderson, Morley & Kervin, John & Reid, Frank, 1986. "Logit Estimates of Strike Incidence from Canadian Contract Data," Journal of Labor Economics, University of Chicago Press, vol. 4(2), pages 257-76, April. [Downloadable!] (restricted)
  4. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Blackwell Publishing, vol. 47(1), pages 225-38, January. [Downloadable!] (restricted)
  5. Jones, Stephen R G, 1988. "The Relationship between Unemployment Spells and Reservation Wages as a Test of Search Theory," The Quarterly Journal of Economics, MIT Press, vol. 103(4), pages 741-65, November. [Downloadable!] (restricted)
  6. Lawrence M. Ausubel & Peter Cramton & Raymond J. Deneckere, 2002. "Bargaining with Incomplete Information," Papers of Peter Cramton 02barg, University of Maryland, Department of Economics - Peter Cramton, revised 12 Mar 2001. [Downloadable!]
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  7. Sheena McConnell, 1987. "Cyclical Fluctuations in Strike Activity," Working Papers 595, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  8. Christofides, Louis N & Swidinsky, Robert & Wilton, David A, 1980. "A Microeconometric Analysis of Spillovers within the Canadian Wage Determination Process," The Review of Economics and Statistics, MIT Press, vol. 62(2), pages 213-21, May. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. repec:fth:prinin:231 is not listed on IDEAS
  2. Raquel Fernandez & Jacob Glazer, 1989. "Striking for a Bargain Between Two Completely Informed Agents," NBER Working Papers 3108, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Michael Huberman & Denise Young, 1995. "What Did Unions Do... An Analysis of Canadian Strike Data, 1901-14," CIRANO Working Papers 95s-17, CIRANO. [Downloadable!]
  4. Peter Cramton & Joseph S. Tracy, 1994. "Wage Bargaining with Time-Varying Threats," Papers of Peter Cramton 94jolew, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998. [Downloadable!]
    Other versions:
  5. David Card, 1988. "Unexpected Inflation, Real Wages, and Employment Determination in Union Contracts," Working Papers 612, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  6. David Card, 1988. "Unexpected Inflation, Real Wages, and Employment Determination in Union Contracts," NBER Working Papers 2768, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. repec:fth:prinin:232 is not listed on IDEAS
  8. Peter Cramton & Joseph S. Tracy, 1992. "Strikes and Holdouts in Wage Bargaining: Theory and Data," Papers of Peter Cramton 92aer, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998. [Downloadable!]
    Other versions:
  9. Douglas Herrington, 1988. "The Effect of Private Information on Wage Settlements and Strike Activity," Working Papers 611, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  10. John M. Abowd & Thomas Lemieux, 1990. "The Effects of International Competiton on Collective Bargaining Outcomes: A Comparison of the United States and Canada," NBER Working Papers 3352, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. repec:fth:prinin:260 is not listed on IDEAS
  12. Orley Ashenfelter & Janet Currie, 1990. "Negotiator Behavior and the Occurrence of Disputes," Working Papers 640, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
    Other versions:
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