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Strikes and Holdouts in Wage Bargaining: Theory and Data

Peter Cramton () and Joseph Tracy ()

Papers of Peter Cramton from University of Maryland, Department of Economics - Peter Cramton

Abstract: We 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 according to the expired contract. We 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.

Keywords: Bargaining; Signaling; U.S. Wage Negotiations (search for similar items in EconPapers)
JEL-codes: C78 D82 J52 (search for similar items in EconPapers)
Pages: 22 pages
Date: 1992, Revised 1998-06-09
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Published in American Economic Review, 82:1, March 1992, pages 100-121. Reprinted in Bengt Holmstrom, Paul Milgrom, and Alvin E. Roth, eds., Game Theory in the Tradition of Bob Wilson, Berkeley Electronic Press, www.bepress.com/wilson, May 2002.

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