Strikes, Wages, and Private Information

Sheena McConnell

American Economic Review, 1989, vol. 79, issue 4, 801-15

Abstract: Private information models of strikes suggest that the strike is used as an information revealing device by the union in the presence of asymmetrical information. A testable prediction of these models is that there is a negative relationship between strikes and the unpredicted component of the wage. This paper finds evidence of such a relationship in a large sample of U.S. labor contracts. The real wage falls by about 3 percent after a strike lasting one hundred days. Copyright 1989 by American Economic Association.

Date: 1989
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