The Ambiguity of Strike Replacement Legislation and Wages: A Sequential Investment-Bargaining Model

21 Pages Posted: 12 May 1999

See all articles by John W. Budd

John W. Budd

University of Minnesota - Twin Cities - Carlson School of Management

Yijiang Wang

University of Minnesota - Twin Cities - Carlson School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: November 1998

Abstract

The effect of strike replacement, or striker replacement, bans has been theoretically modeled using private information bargaining models which predict that strike replacement restrictions will increase wages. These models, however, assume that the capital stock is constant. This paper develops a sequential model in which a capital investment decision precedes wage bargaining. Strike replacement legislation which increases labor's bargaining power and reduces the productivity of capital during a strike can cause reduced investment. Consequently, the theoretical effect of strike replacement restrictions on wage outcomes is ambiguous. This model can also be applied to other public policy debates in labor relations.

JEL Classification: J5

Suggested Citation

Budd, John W. and Wang, Yijiang, The Ambiguity of Strike Replacement Legislation and Wages: A Sequential Investment-Bargaining Model (November 1998). Available at SSRN: https://ssrn.com/abstract=150328 or http://dx.doi.org/10.2139/ssrn.150328

John W. Budd (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

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Yijiang Wang

University of Minnesota - Twin Cities - Carlson School of Management ( email )

321 19th Avenue South
Industrial Relations Center
Minneapolis, MN 55455
United States
612-624-6814 (Phone)
612-624-8360 (Fax)

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