Are Good Industrial Relations Good for the Economy?

John Addison () and Paulino Teixeira ()

Working Paper Series from Rimini Centre for Economic Analysis

Abstract: Using international data, we investigate whether the quality of industrial relations matters for the macro economy. We measure industrial relations inversely by strikes Ð which proxy we cross-check with an industrial relations reputation indicator Ð and our macro performance indicator is the unemployment rate. Independent of the role of other institutions, good industrial relations do seem to matter: greater strike volume is associated with higher unemployment. But these results apply in cross section. Holding country effects constant, the sign of the strikes coefficient is abruptly reversed. Although it does not seem to be the case that the line of causation runs from unemployment to strikes once we control for the endogeneity of strikes, it is also the case that support for the strikes proxy for industrial relations quality is much eroded.

Keywords: strikes; industrial relations quality; unemployment; labor market institutions; cross-country data (search for similar items in EconPapers)
JEL-codes: E24 J5 J64 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab and nep-mac
Date: 2007-07

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