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Labor Policy and Investment

John Budd () and Yijiang Wang

Working Papers from Human Resources and Labor Studies, University of Minnesota (Twin Cities Campus)

Abstract: Policy debates over proposed legislative labor policy changes include contentions that business investment will negatively respond to labor laws that favor labor. Research on labor policy, however, often assumes that investment is fixed. We present a sequential bargaining model in which labor policies that increase labor's bargaining power and reduce management's options during strikes are predicted to reduce investment. Using provincial data on investment for 1967 to 1999, a strike replacement ban and protections for workers who refuse to handle struck work are estimated to reduce new investment, especially within the first few years after the policy change.

JEL-codes: G31 J58 (search for similar items in EconPapers)
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Citations: View citations in EconPapers (1)

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