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Strikes and Holdouts in Wage Bargaining: Theory and Data

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Author Info
Peter Cramton () (Economics Department, University of Maryland)
Joseph S. Tracy ()

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Abstract

We develop a private-information model of union contract negotiations in which disputes signal a firm's willingness to pay. Previous models have assumed that all labor disputes take the form of a strike. Yet a prominent feature of U.S. collective bargaining is the holdout: negotiations often continue without a strike after the contract has expired. Production continues with workers paid according to the expired contract. We analyze the union's decision to strike or hold out and highlight its importance to strike activity. Strikes are more likely to occur after a drop in the real wage or a decline in unemployment.

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File URL: http://www.cramton.umd.edu/papers1990-1994/92aer-strikes-and-holdouts.pdf
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Publisher Info
Paper provided by University of Maryland, Department of Economics - Peter Cramton in its series Papers of Peter Cramton with number 92aer.

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Length: 22 pages
Date of creation: 1992
Date of revision: 09 Jun 1998
Publication status: Published in American Economic Review, 82:1, March 1992, pages 100-121. Reprinted in Bengt Holmstrom, Paul Milgrom, and Alvin E. Roth, eds., Game Theory in the Tradition of Bob Wilson, Berkeley Electronic Press, www.bepress.com/wilson, May 2002.
Handle: RePEc:pcc:pccumd:92aer

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Postal: Economics Department, University of Maryland, College Park, MD 20742-7211
Phone: (202) 318-0520
Fax: (202) 318-0520
Web page: http://www.cramton.umd.edu

For technical questions regarding this item, or to correct its listing, contact: (Peter Cramton).

Related research
Keywords: Bargaining Signaling U.S. Wage Negotiations

Other versions of this item:

Find related papers by JEL classification:
C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation

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. 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. [Downloadable!] (restricted)
  2. 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)
  3. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January. [Downloadable!] (restricted)
  4. Admati, Anat R & Perry, Motty, 1987. "Strategic Delay in Bargaining," Review of Economic Studies, Blackwell Publishing, vol. 54(3), pages 345-64, July. [Downloadable!] (restricted)
  5. Cramton, Peter C, 1992. "Strategic Delay in Bargaining with Two-Sided Uncertainty," Review of Economic Studies, Blackwell Publishing, vol. 59(1), pages 205-25, January. [Downloadable!] (restricted)
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  6. Crawford, Vincent P, 1982. "A Theory of Disagreement in Bargaining," Econometrica, Econometric Society, vol. 50(3), pages 607-37, May. [Downloadable!] (restricted)
  7. Holden, S., 1990. "A Bargaining Theory Of Inflation," Memorandum 13/1990, Oslo University, Department of Economics.
  8. David Card, 1988. "Strikes and Wages: A Test of a Signalling Model," NBER Working Papers 2550, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Hart, Oliver, 1989. "Bargaining and Strikes," The Quarterly Journal of Economics, MIT Press, vol. 104(1), pages 25-43, February. [Downloadable!] (restricted)
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  10. Binmore, K. & Osborne, M.J. & Rubinstein, A., 1989. "Noncooperative Models Of Bargaining," Papers 89-26, Michigan - Center for Research on Economic & Social Theory.
    Other versions:
  11. Herbert R. Northrup, 1971. "The Railway Labor Act: A critical reappraisal," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 25(1), pages 3-31, October.
  12. Martin J. Mauro, 1982. "Strikes as a result of imperfect information," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 35(4), pages 522-538, July.
  13. Harrison, Alan & Stewart, Mark, 1989. "Cyclical Fluctuations in Strike Durations," American Economic Review, American Economic Association, vol. 79(4), pages 827-41, September. [Downloadable!] (restricted)
  14. Haller, Hans & Holden, Steinar, 1990. "A letter to the editor on wage bargaining," Journal of Economic Theory, Elsevier, vol. 52(1), pages 232-236, October. [Downloadable!] (restricted)
  15. Bruce E. Kaufman, 1981. "Bargaining theory, inflation, and cyclical strike activity in manufacturing," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 34(3), pages 333-355, April.
  16. Martin J. Osborne & Ariel Rubinstein, 2005. "Bargaining and Markets," Levine's Bibliography 666156000000000515, UCLA Department of Economics. [Downloadable!]
  17. McConnell, Sheena, 1989. "Strikes, Wages, and Private Information," American Economic Review, American Economic Association, vol. 79(4), pages 801-15, September. [Downloadable!] (restricted)
  18. Roth, Alvin E & Murnighan, J Keith & Schoumaker, Francoise, 1988. "The Deadline Effect in Bargaining: Some Experimental Evidence," American Economic Review, American Economic Association, vol. 78(4), pages 806-23, September. [Downloadable!] (restricted)
  19. Fernandez, Raquel & Glazer, Jacob, 1991. "Striking for a Bargain between Two Completely Informed Agents," American Economic Review, American Economic Association, vol. 81(1), pages 240-52, March. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(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. Peter Cramton & Morley Gunderson & Joseph Tracy, 1999. "The Effect of Collective Bargaining Legislation on Strikes and Wages," Papers of Peter Cramton 99res, University of Maryland, Department of Economics - Peter Cramton, revised 30 Jul 1998. [Downloadable!]
    Other versions:
  2. Carlos Diaz-Moreno & Jose E. Galdon-Sanchez, 2000. "Collective Bargaining under Complete Information," STICERD - Theoretical Economics Paper Series 401, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. [Downloadable!]
  3. Santiago Sanchez-Pages, 2004. "Conflict as a Part of the Bargaining Process: Theory and Empirical Evidence," ESE Discussion Papers 129, Edinburgh School of Economics, University of Edinburgh. [Downloadable!]
  4. Robert Gibbons, 1997. "An Introduction to Applicable Game Theory," NBER Technical Working Papers 0199, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Raymond Deneckere & Meng-Yu Liang, 2001. "Bargaining with Interdependent Values," UWO Department of Economics Working Papers 20017, University of Western Ontario, Department of Economics. [Downloadable!]
  6. Daniel S. Hosken & David N. Margolis, 1996. "The Efficiency of Collective Bargaining in Public Schools," CIRANO Working Papers 96s-10, CIRANO. [Downloadable!]
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  7. Louis Christofides & Amy Chen Peng, 2006. "Major Provisions of Labour Contracts and their Theoretical Coherence," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
  8. Steinar Holden & Fredrik Wulfsberg, 2007. "How strong is the case for downward real wage rigidity?," Working Papers 07-6, Federal Reserve Bank of Boston. [Downloadable!]
  9. Peter Cramton & Hamid Mehran & Joseph Tracy, 1997. "ESOP Fables: The Impact of Employee Stock Ownership Plans on Labor Disputes," Papers of Peter Cramton 98wpesop, University of Maryland, Department of Economics - Peter Cramton, revised Jun 1997. [Downloadable!]
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  10. Peter Cramton & Joseph S. Tracy, 1998. "The Use of Replacement Workers in Union Contract Negotiations: The U.S. Experience, 1980-1989," Papers of Peter Cramton 98jole, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998. [Downloadable!]
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  11. Gibbons, Robert, 1997. "An Introduction to Applicable Game Theory," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 127-49, Winter. [Downloadable!] (restricted)
  12. 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. [Downloadable!]
  13. Kurtis Swope, Pamela Schmitt, John Cadigan and Robert Shupp, 2008. "An Experimental Study of the Holdout Problem in a Multilateral Bargaining Game," Departmental Working Papers 21, United States Naval Academy Department of Economics. [Downloadable!]
  14. Peter Cramton, 1992. "Strategic Delay in Bargaining with Two-Sided Uncertainty," Papers of Peter Cramton 92res, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998. [Downloadable!]
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  15. Christofides, L. & Peng, A., 2007. "Real Wage Chronologies," Working Papers 2007-7, University of Guelph, Department of Economics. [Downloadable!]
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  16. Steinar Holden, 2001. "Monetary Policy and Nominal Rigidities under Low Inflation," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
  17. Robert A. Pollak, 2002. "An Intergenerational Model of Domestic Violence," NBER Working Papers 9099, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  18. Andrew F. Daughety & Jennifer F. Reinganum, 1994. "Settlement Negotiations with Two-Sided Asymmetric Information: Model Duality, Information Distribution and Efficiency," Game Theory and Information 9403009, EconWPA. [Downloadable!]
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  19. Matouschek, Niko, 2002. "Information and the Optimal Ownership Structure of Firms," CEPR Discussion Papers 3216, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  20. Steinar Holden & Fredrik Wulfsberg, 2007. "Are Real Wages Rigid Downwards?," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
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  21. Louis N. Christofides & Paris Nearchou, 2007. "Real and Nominal Wage Rigidities in Collective Bargaining Agreements," IZA Discussion Papers 2799, Institute for the Study of Labor (IZA). [Downloadable!]
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  22. Fabienne Tournadre & Marie-Claire Villeval, 2001. "Learning from Strikes," Post-Print halshs-00151430_v1, HAL. [Downloadable!]
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  23. Leif Danziger, 2006. "Extension of Labor Contracts and Optimal Backpay," IZA Discussion Papers 2366, Institute for the Study of Labor (IZA). [Downloadable!]
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  24. Peter Cramton & Joseph S. Tracy, 1994. "The Determinants of U.S. Labor Disputes," Papers of Peter Cramton 94jole, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998. [Downloadable!]
    Other versions:
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