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A Good Time to Stay Out? Strikes and the Business Cycle

  • Paul J. Devereux
  • Robert A. Hart

In this paper, we compile a unique historical dataset that records strike activity in the British engineering industry from 1920 to 1970. These data have the advantage of containing a fairly homogenous set of companies and workers, covering a long period with varying labour market conditions, including information that enables the addition of union and company fixed effects, and providing geographical detail that allows a districtlevel analysis that controls for year and seasonal effects. We study the cyclicality of strike durations, strike incidence, and strike outcomes and distinguish between pay and non-pay strikes. Like the previous literature, we find evidence that strikes over pay have countercyclical durations. However, in the post-war period, the magnitude of this effect is much reduced when union and firm fixed effects are included. These findings suggest that it is important when studying strike durations to take account of differences in the composition of companies and unions that are involved in strikes at different points of the business cycle. We also find that strike outcomes tend to be more favourable to unions when the national unemployment rate is lower.

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Article provided by London School of Economics in its journal British Journal of Industrial Relations.

Volume (Year): 49 (2011)
Issue (Month): Supplement 1 (06)
Pages: s70-s92

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Handle: RePEc:bla:brjirl:v:49:y:2011:i:s1:p:s70-s92
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  1. Kennan, John, 1985. "The duration of contract strikes in U.S. manufacturing," Journal of Econometrics, Elsevier, vol. 28(1), pages 5-28, April.
  2. Kennan, John, 1987. "The economics of strikes," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 2, chapter 19, pages 1091-1137 Elsevier.
  3. Paul J. Devereux, 2001. "The Cyclicality of real wages within employer-employee matches," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 54(4), pages 835-850, July.
  4. Gary Solon & Robert Barsky & Jonathan A. Parker, 1992. "Measuring the Cyclicality of Real Wages: How Important is Composition Bias," NBER Working Papers 4202, National Bureau of Economic Research, Inc.
  5. Kennan, J. & Wilson, R., 1991. "Bargaining with Private Information," Working Papers 90-01rev, University of Iowa, Department of Economics.
  6. 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.
  7. Sheena McConnell, 1990. "Cyclical fluctuations in strike activity," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 44(1), pages 130-143, October.
  8. Booth, Alison & Cressy, Robert, 1990. "Strikes with Asymmetric Information: Theory and Evidence," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(3), pages 269-91, August.
  9. Booth, Alison & Cressy, Robert, 1990. "Erratum [Strikes with Asymmetric Information: Theory and Evidence]," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(4), pages 492, Special I.
  10. Harrison, Alan & Stewart, Mark, 1994. "Is Strike Behavior Cyclical?," Journal of Labor Economics, University of Chicago Press, vol. 12(4), pages 524-53, October.
  11. Harrison, Alan & Stewart, Mark, 1989. "Cyclical Fluctuations in Strike Durations," American Economic Review, American Economic Association, vol. 79(4), pages 827-41, September.
  12. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
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