Strikes and Holdouts in Wage Bargaining: Theory and Data

Peter Cramton and Joseph Tracy

American Economic Review, 1992, vol. 82, issue 1, 100-121

Abstract: The authors develop a private-information model of union contract negotiations in which disputes signal a firm's willingness-to-pay. Previous models have assumed that all labor disputes take the form of a strike. Yet a prominent feature of U.S. collective bargaining is the holdout: negotiations often continue without a strike after the contract has expired. Production continues with workers paid accordingly to the expired contract. The authors analyze the union's decision to strike or hold out and highlight its importance to strike activity. Strikes are more likely to occur after a drop in the real wage or a decline in unemployment. Copyright 1992 by American Economic Association.

Date: 1992
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Working Paper: Strikes and Holdouts in Wage Bargaining: Theory and Data (1998)
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