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

Advances in Industrial and Labor Relations, Vol. 9, 1999

Posted: 24 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

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Abstract

The effects of laws banning the use of strike replacements has been theoretically modeled using private information bargaining models. These models predict that strike replacement restrictions will increase wages, but assume that the capital stock is constant. This article develops a sequential model in which wage bargaining follows a capital investment decision. In this theoretical framework, 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. The article also explores extensions of this model to other public policy debates in labor relations.

Note: This is a description of the article and is not the actual abstract.

JEL Classification: J5

Suggested Citation

Budd, John W. and Wang, Yijiang, The Ambiguity of Strike Replacement Legislation and Wages: A Sequential Investment-Bargaining Model. Advances in Industrial and Labor Relations, Vol. 9, 1999, Available at SSRN: https://ssrn.com/abstract=150348

John W. Budd (Contact Author)

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

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Center for Human Resources and Labor Studies
Minneapolis, MN 55455
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HOME PAGE: http://www.johnwbudd.com

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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