Does the Quality of Industrial Relations Matter for the Macro Economy? A Cross-Country Analysis Using Strikes Data
38 Pages Posted: 15 Feb 2006
Date Written: February 2006
Using international data, we investigate whether the quality of industrial relations matters for the macro economy. We measure industrial relations inversely by strikes - which proxy we cross-check with an industrial relations reputation indicator - and our macro performance outcome is the unemployment rate. Independent of the role of other institutions, good industrial relations do seem to matter: greater strike volume is associated with higher unemployment. Holding country effects constant, however, the sign of the variable is reversed. This fixed-effects result likely picks up a direct effect of strikes, namely, their tendency to rise when striking becomes more attractive to the union.
Keywords: strike rate/volume, quality of labor relations, labor market institutions
JEL Classification: E24, J52, J53, J64, J65
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