Strategic Union Delegation and Strike Activity
We develop a model of wage determination with private information, in which te union has the option to delegate the wage bargaining to either surplus-maximizing delegates or to wage-maximizing delegates (such as senior union members). We show that the strike activity is greater whenever the union chooses wage-maximizing delegates instead of surplus-maximizing delegates. We also provide the necessary and sufficient condition such that it is always optimal for the union to choose wage-maximizing delegates and we we find that the efficiency loss due to strategic delegation may be quite important.
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