When Unions "Mattered": Assessing the Impact of Strikes on Financial Markets: 1925-1937

29 Pages Posted: 19 Jul 2000 Last revised: 12 Mar 2010

See all articles by John E. DiNardo

John E. DiNardo

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy; National Bureau of Economic Research (NBER)

Kevin F. Hallock

Cornell University; National Bureau of Economic Research (NBER)

Date Written: July 2000

Abstract

Combining information from labor historians and using techniques from finance we analyze the strikes that labor historians have agreed are pivotal in American history' during the period 1925-1937. Using information we collected on strike dates and historical financial market stock price data we assess the financial market's view of these conflicts. We study the effects of major strikes between the world wars on detailed industry stock prices. We find that strikes have large, negative effects on industry stock value. We also find that longer strikes, violent strikes, strikes where unions win,' industry-wide strikes, strikes that lead to union recognition, and strikes that lead to large wage increases lead to larger negative share price reactions than other strikes. Also, our analysis shows that most of the news' in a strike seems to be incorporated very early on in the strike. Our analysis strongly suggests that although the financial markets generally expected unions to lose,' they viewed union victories as quite important determinants of the share of firm profits going to stockholders.

Suggested Citation

DiNardo, John and Hallock, Kevin F., When Unions "Mattered": Assessing the Impact of Strikes on Financial Markets: 1925-1937 (July 2000). NBER Working Paper No. w7794, Available at SSRN: https://ssrn.com/abstract=236555

John DiNardo (Contact Author)

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy ( email )

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HOME PAGE: http://www-personal.umich.edu/~jdinardo/

National Bureau of Economic Research (NBER)

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Kevin F. Hallock

Cornell University ( email )

Ithaca, NY 14853
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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