A Good Time to Stay Out? Strikes and the Business Cycle

42 Pages Posted: 4 Aug 2008

See all articles by Paul J. Devereux

Paul J. Devereux

University College Dublin - Department of Economics; IZA Institute of Labor Economics

Robert A. Hart

University of Stirling - Department of Economics; Institute for the Study of Labor (IZA)

Abstract

In this paper, we compile a unique historical dataset that records strike activity in the British engineering industry from 1920 to 1970. These data have the advantage of containing a fairly homogenous set of companies and workers, covering a long period with varying labour market conditions, including information that enables the addition of union and company fixed effects, and providing geographical detail that allows a district-level analysis that controls for year and seasonal effects. We study the cyclicality of strike durations, strike incidence, and strike outcomes and distinguish between pay and non-pay strikes. Like the previous literature, we find evidence that strikes over pay have countercyclical durations. However, in the post-war period, the magnitude of this effect is much reduced when union and firm fixed effects are included. These findings suggest that it is important when studying strike durations to take account of differences in the composition of companies and unions that are involved in strikes at different points of the business cycle. We also find that strike outcomes tend to be more favourable to unions when the national unemployment rate is lower.

Keywords: incidence, duration, cyclicality, strikes, outcome

JEL Classification: E32, J31

Suggested Citation

Devereux, Paul J. and Hart, Robert A., A Good Time to Stay Out? Strikes and the Business Cycle. IZA Discussion Paper No. 3614, Available at SSRN: https://ssrn.com/abstract=1198686 or http://dx.doi.org/10.2139/ssrn.1198686

Paul J. Devereux (Contact Author)

University College Dublin - Department of Economics ( email )

Belfield
Dublin 4, 4
Ireland

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Robert A. Hart

University of Stirling - Department of Economics ( email )

Stirling, Scotland FK9 4LA
United Kingdom
+44 1786 467 471 (Phone)
+44 1786 467 469 (Fax)

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

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