Negotiating with Labor under Financial Distress

Efraim Benmelech, Nittai K. Bergman and Ricardo J. Enriquez

The Review of Corporate Finance Studies, 2012, vol. 1, issue 1, 28-67

Abstract: We analyze how firms renegotiate labor contracts to extract concessions from labor. While anecdotal evidence suggests that firms tend to renegotiate wages downward in times of financial distress, there is no empirical evidence that documents such renegotiation, its determinants, and its magnitude. This article attempts to fill this gap. Using a unique data set of airlines, which includes detailed information on wages and pension plans, we document an empirical link between airline financial distress, pension underfunding, and wage concessions.

JEL-codes: G23 G33 J31 J33 L93 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (50)

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Working Paper: Negotiating with Labor Under Financial Distress (2011)
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