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Strikes and Holdouts in Wage Bargaining: Theory and Data

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  • Cramton, Peter C
  • Tracy, Joseph S

Abstract

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.

Suggested Citation

  • Cramton, Peter C & Tracy, Joseph S, 1992. "Strikes and Holdouts in Wage Bargaining: Theory and Data," American Economic Review, American Economic Association, vol. 82(1), pages 100-121, March.
    • Handle: RePEc:aea:aecrev:v:82:y:1992:i:1:p:100-121
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    More about this item

    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; Mechanism Design
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation

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