Controlling for Endogeneity of Strike Variables in the Estimation of Wage Settlement Equations

Sergi Jimenez-Martin

Journal of Labor Economics, 1999, vol. 17, issue 3, 583-606

Abstract: This article analyzes wage changes with an unbalanced panel from the Spanish Collective Bargaining in Large Firms survey. Central to the analysis are the joint determination of strike and wage outcomes and, in particular, the estimation of the slope of the wage concession curve. The author controls for the possible endogeneity of strike variables in the wage equation and suggests two sets of instruments: lagged strike outcomes or reduced-form predictions of the strike variables. When controlling for endogeneity, a negative relationship between strike duration and the size of the wage change arises. However, short strikes still produce higher wage changes. Copyright 1999 by University of Chicago Press.

Date: 1999
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