Market Structure, Strike Activity, and Union Wage Settlements

54 Pages Posted: 9 Jun 2004 Last revised: 8 Aug 2010

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

Joseph S. Tracy

National Bureau of Economic Research (NBER); Federal Reserve Bank of Dallas

Date Written: May 1988

Abstract

We attempt a synthesis of the industrial relations market structure hypothesis with the modern asymmetric information theory of wage and strike outcomes The industrial relations literature contains a variety of arguments indicating that wage settlements should be positively related to the degree of product market sales concentration and the degree of product market coverage by the union. An asymmetric information bargaining model is specified that relates these same variables to strike probabilities as well as wage settlements. Our empirical analysis is conducted for :he periods from 1970-1380 (strikes) and 1976-1980 (wages). We find that the relation between trade-adjusted sales concentration and wage settlements is positive at low levels of concentration but negative at high levels of concentration. The relation is always negative for strike probabilities. We also find that the relation between the trade-adjusted percent of the product market covered by the same union and the percentage covered by other union are positively related to both wage settlements and strike probabilities. Our empirical analysis includes a rich set of controls including unrestricted time and industry effects, which do not affect the major conclusions.

Suggested Citation

Abowd, John Maron and Tracy, Joseph, Market Structure, Strike Activity, and Union Wage Settlements (May 1988). NBER Working Paper No. w2595, Available at SSRN: https://ssrn.com/abstract=428344

John Maron Abowd (Contact Author)

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