Negotiating with Labor Under Financial Distress

Efraim Benmelech, Nittai K. Bergman and Ricardo Enriquez

No 17192, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We analyze how firms renegotiate labor contracts to extract concessions from labor. While anecdotal evidence suggests that firms tend to renegotiate down wages in times of financial distress, there is no empirical evidence that documents such renegotiation, its determinants, and its magnitude. This paper attempts to fill this gap. Using a unique data set of airlines that 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 G32 G33 J21 J24 J26 J31 (search for similar items in EconPapers)
Date: 2011-07
Note: CF LS
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Citations: View citations in EconPapers (3)

Published as Benmelech, Efraim, Nittai Bergman and Ricardo Enriquez. 2012. Negotiating with Labor Under Financial Distress. Review of Corporate Finance Studies. 1: 28-67.

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