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Strikes and Holdouts in Wage Bargaining: Theory and Data

  • Cramton, Peter C
  • Tracy, Joseph S

The authors 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 accordingly to the expired contract. The authors 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. Copyright 1992 by American Economic Association.

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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 82 (1992)
Issue (Month): 1 (March)
Pages: 100-121

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Handle: RePEc:aea:aecrev:v:82:y:1992:i:1:p:100-121
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  1. Binmore, K. & Osborne, M.J. & Rubinstein, A., 1989. "Noncooperative Models Of Bargaining," Papers 89-26, Michigan - Center for Research on Economic & Social Theory.
  2. Hart, Oliver, 1989. "Bargaining and Strikes," The Quarterly Journal of Economics, MIT Press, vol. 104(1), pages 25-43, February.
  3. Herbert R. Northrup, 1971. "The Railway Labor Act: A critical reappraisal," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 25(1), pages 3-31, October.
  4. 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.
  5. 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.
  6. Admati, Anat R & Perry, Motty, 1987. "Strategic Delay in Bargaining," Review of Economic Studies, Wiley Blackwell, vol. 54(3), pages 345-64, July.
  7. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
  8. David Card, 1988. "Strikes and Wages: A Test of a Signalling Model," NBER Working Papers 2550, National Bureau of Economic Research, Inc.
  9. 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.
  10. 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.
  11. 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.
  12. Peter Cramton, 1991. "Dynamic Bargaining with Transaction Costs," Papers of Peter Cramton 91ms, University of Maryland, Department of Economics - Peter Cramton, revised 15 Jun 1998.
  13. Martin J. Osborne & Ariel Rubinstein, 2005. "Bargaining and Markets," Levine's Bibliography 666156000000000515, UCLA Department of Economics.
  14. Holden, S., 1990. "A Bargaining Theory Of Inflation," Memorandum 13/1990, Oslo University, Department of Economics.
  15. Crawford, Vincent P, 1982. "A Theory of Disagreement in Bargaining," Econometrica, Econometric Society, vol. 50(3), pages 607-37, May.
  16. McConnell, Sheena, 1989. "Strikes, Wages, and Private Information," American Economic Review, American Economic Association, vol. 79(4), pages 801-15, September.
  17. Bruce E. Kaufman, 1981. "Bargaining theory, inflation, and cyclical strike activity in manufacturing," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 34(3), pages 333-355, April.
  18. Harrison, Alan & Stewart, Mark, 1989. "Cyclical Fluctuations in Strike Durations," American Economic Review, American Economic Association, vol. 79(4), pages 827-41, September.
  19. 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.
  20. Martin J. Mauro, 1982. "Strikes as a result of imperfect information," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 35(4), pages 522-538, July.
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