Collective Bargaining and the Division of the Value of the Enterprise

67 Pages Posted: 28 Dec 2006 Last revised: 15 Mar 2014

See all articles by John M. Abowd

John M. Abowd

U.S. Census Bureau; Cornell University Department of Economics; Labor Dynamics Institute; School of Industrial and Labor Relations; NBER (on leave); CREST; IZA Institute of Labor Economics

Date Written: 1987

Abstract

The enterprise (firm) is modeled as a collection of formal and informal contracts providing various factors of production with claims on the income stream in consideration of assets or services supplied to the enterprise. The strongly efficient bargaining model implies that the division of the quasi-rents will result in dollar for dollar exchanges of wealth between the union members and the shareholders. The leading inefficient bargaining models do not imply such tradeoffs in general. The model is tested by considering contract settlements during the years 1976 to 1982 as recorded by the Bureau of National Affairs in Collective Bargaining Negotiations and Contracts. Security price data for the firms were merged with these bargaining unit level settlement data. The tests provide substantial confirmation of the dollar for dollar wealth tradeoff between union members and shareholders.

Suggested Citation

Abowd, John Maron, Collective Bargaining and the Division of the Value of the Enterprise (1987). NBER Working Paper No. w2137, Available at SSRN: https://ssrn.com/abstract=346955

John Maron Abowd (Contact Author)

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