Union Leaders as Experts: Wage Bargaining and Strikes With Union-Wide Ballot Requirements

Abstract

To avoid strikes and curb labour militancy, some governments have introduced legislation stating that union leadership as well as wage offers should be decided through union-wide ballots. This paper shows that members still have incentives to appoint militant union leaders, if these leaders have access to information critical for the members' voting decisions. Furthermore, conflicts may arise in equilibrium even when all players know that there exists a wage the firm is willing to offer and which a majority of union members prefer to a strike. Ballot requirements hence preclude neither militant union bosses nor inefficient conflicts.

Keywords: Wage bargaining, labour market conflicts, communication, delegation

JEL Classification: J51, J52, C78