An Empirical Test of an Asymmetric Information Model of Strikes
Recent developments in the thoery of strategic bargaining demonstrate howinformational asymmetries can lead to prolonged and costly bargaining. These models can be applied to contract negotiations between unions and firms yielding an economic theory of strikes. To date, however, few empirical tests of these models have been carried out. This paper presents some evidence supporting this view of strikes. A set of predictions concerning the incidence and unconditional duration of strikes is derived from a simple bargaining model where the union is uncertain about the firm's future profitability. These predictions are then tested on a micro data set of major U.S. contract negotiations which took place from 1973 to 1977.
|Date of creation:||Mar 1986|
|Date of revision:|
|Publication status:||published as Journal of Labor Economics, Vol. 5, No. 2, April 1987.|
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