Unions, bargaining and strikes (original) (raw)
Strikes and holdouts in wage bargaining: theory and data
1992
We develop a private-information model of union contract negotiations in which disputes signal a firm's willingness to pay. Previous models have assumed that all labor disputes take the form of a strike. Yet a prominent feature of U.S. collective bargaining is the holdout: negotiations often continue without a strike after the contract has expired. Production continues with workers paid according to the expired contract. We analyze the union's decision to strike or hold out and highlight its importance to strike activity. Strikes are more likely to occur after a drop in the real wage or a decline in unemployment. (JEL C78, J52, D82) Strikes and other costly disputes are commonplace. Yet a theory of why they happen has been slow to develop. John R. concluded that most strikes result from faulty negotiation. Arthur M. moved toward an alternative explanation of strikes by recognizing that union leaders are motivated by personal advancement and the growth of the union. Orley Ashenfelter and George E. Johnson (1969) developed Ross's political model of unions into a theory of strikes.
Collective Bargaining in the Twenty-First Century: A Negotiations Institution at Risk
Negotiation Journal, 2007
Collective bargaining, a core social institution, faces a fundamental transformational challenge. National survey data provide unique insights into the current status of the bargaining process -revealing challenges and opportunities. Awareness and use of interest-based bargaining principles is widespread but complicated by underlying tensions between labor and management. The findings illustrate the value of conducting an institutional-level analysis of a negotiations process.
1987
[Excerpt] Of course, collective bargaining in this country has always been an institution rich in diversity. The nature of each collective bargaining relationship came about through a variety of influences both internal and external to the bargaining process. The internal factors include such things as the ideology of labor and management, the way the unions and employers were organized, and the history of the relationship between the parties. The external factors include the state of the economy and the nature of the laws and court decisions that regulate bargaining practices. Nonetheless, this diversity has never been more in evidence than in the 1980s. The environmental forces mentioned above placed such strains on labor and management that bargaining in many industries was jolted out of the path it had followed since World War II. Different unions and employers responded to these pressures in different ways, however, creating more diversity than had been apparent for most of the post-World War II period. This volume was designed with the intent of capturing that diversity. The eight industry studies illustrate the variety of ways in which bargaining is practiced as well as the diversity of forces and industry adaptations that have been reshaping collective bargaining in the United States. Thus, we present studies of industries in which collective bargaining is a well-established process (automobiles and agricultural machinery, for example) and ones in which it is not (higher education and police). We have a representative selection of manufacturing and services, private sector and public sector, white-collar and blue-collar bargaining.
Claim, offer and information in wage bargaining
A stylized private-information model on the determination of the initial works council claim and the initial firm (counter) offer is analyzed in the context of the Spanish Collective Bargaining system. The Spanish system forces agents to make initial offers at the beginning ot the negotiation process. Thus initial firm offers are expected to reveal very little information. Our findings confirm such a guess. Morever, we found that initial offers crucially depend on aggregate bargaining conditions, price expectations and those variables that reflect the characteristics of the negotiation unit. However, the latter set of variables enters differently in both offer equations.
Efficiency and behavioral considerations in labor negotiations
Journal of Economic Psychology, 2010
Experimental literature has shown that social preferences influence how individuals bargain and make sharing decisions. It usually considers situations in which individuals negotiate on a single issue. This paper explores a different environment and reports on an experiment based on a non-cooperative game in which the choice of the bargaining agenda is endogenous. We fnd that firms reveal a strong preference for single-issue bargaining although the subgame perfect equilibrium predicts the choice of the multi-issue bargaining. In multi-issue bargaining unions offer smaller relative payoff shares to firms than in singleissue bargaining and this leads to a higher conflict rate than in a single-issue bargaining. Social preferences and a concern for relative payoffs support this preference for a restricted bargaining agenda but they induce a loss of efficiency.
INFORMATION SHARING IN UNION-FIRM RELATIONSHIPS*
International Economic Review, 2008
Large firms often negotiate wage rates with labor unions. When they do, an ex ante agreement to share information should make it more likely that they will reach an agreement and capture the gains from trade. However, if the firm refuses to share information, the union may shade down its wage demand to increase the probability of acceptance. This reduction in the wage can increase the joint surplus of the agents and increase social welfare. As a result, there are some circumstances in which bargaining with incomplete information can be better for the agents and society than bargaining with complete information. *
Individual vs. Collective Agreements: A Study In Conflict and Union Leverage
Fordham Law Review, 1974
I. INTRODUCTION 0 UR national labor policy, as evidenced by the National Labor Relations Acte (NLRA), was carefully molded to protect the working man from potential exploitation by his employer. To give the individual worker the power to deal with his industrialist employer from a position of strength, our labor policy accords such laborers the right to pool their strength through union organization.' There is no sign in the legislative history of this act that Congress envisioned a strong union growth among a class of employees who, sometimes in less than one year, can earn more than the average worker does in a lifetime. These people, notably in the entertainment and mass media fields, wield the bargaining power of their names and expertise. As individuals, they often have as substantial a bargaining position as an entire union in another area. Yet these big-time union members are grouped with their perhaps less fortunate compatriots. In the name of concerted activity, they are required to suspend the fruits of their labors, and the employer is faced with this extraordinary additional pressure. Perhaps this is justified, at least where gain is anticipated for the immediate union to which these entertainers and media personalities belong. However, as the gain to the immediate union becomes less direct, as in the case of honoring another union's picket line, the policies underlying such activities should be reexamined. This article is directed to a generic examination of the rights a person might have under an individual agreement, when the agreement is in conflict with a collective bargaining agreement applicable to that individual. Specifically, this article will deal with problems faced in two recent New York lower court decisions 3 dealing with television network newsmenannouncers, members of the American Federation of Television and Radio Artists (AFTRA), who were ordered by their union to honor the picket lines of another union on strike against the networks. The issues * Member of the California Bar. Mr. Dekom received his B.A. from Yale University and his J. D. from U.CL.A. 1. 29 u.s.c. § § 151-66 (1970). 4. 29 U.S.C. § § 151-66 (1970). 5. "The [NLRAI does not compel agreements between employers and employees.... It does not prevent the employer 'from refusing to make a collective contract and hiring individuals on whatever terms' the employer 'may by unilateral action determine.'" NLRB v.
Transparency Versus Back-Room Deals in Bargaining ( working title )
2014
We design an experiment to study the effects of transparency on bargaining processes. We show that whether transparency arrises endogenously depends on the degree of competition between subjects. In a competitive setting there is no transparency: subjects use private communication channels to compete for favors from those in power and establish back-room deals. In the absence of competition the bargaining process is transparent: subjects communicate publicly and outcomes are more egalitarian. We further show that in a competitive setting, imposing transparency by requiring all communication to be public reduces the observed competition between subjects and leads to more egalitarian outcomes.
Unions’ Relative Concerns and Strikes in Wage Bargaining
Bulletin of Economic Research, 2012
We consider a model of wage determination with private information in a duopoly. We investigate the effects of unions having relative concerns on the negotiated wage and the strike activity. We show that an increase of unions' relative concerns has an ambiguous effect on the strike activity.
The Role of Communication in Bargaining
Human Communication Research, 1982
This essay classifies, reviews, and critiques the current literature on the role of communication in the bargaining process. As such, it provides an up-to-date review of the research findings within four areas: communication opportunity, information exchange, message strategies. and categories of interaction. These areas illustrate three different perspectives of communication: the mechanistic, the psychological, and the pragmatic views. Integration of this literature reveals that bargaining interaction differs from group problem solving in the types of messages used and in the evolution of bargaining stages, and that communication patterns distinguish between the initial and the latter stages of bargaining. Research on conflict and conflict resolution has generated a massive array of social science literature. Although this literature enhances our understanding of conflict, the lack of integration and systematic classification hinders theoretical development. Problems in synthesis stem, in part, from the conceptual quagmire that surrounds the use of this term. That is, conflict refers to a broad range of behaviors and is often equated with disagreement, hostility, competition, controversy, and incompatibility. Researchers recognize the futility of selecting a single definition for this term but they also acknowledge that the use of one term to incorporate goals, perceptions, emotions, behaviors, strategies, and outcomes contributes to the theoretical muddle that characterizes the conflict literature (Fink, 1968; Thomas, 1976). Definitional disputes accrue, in part, from diverse orientations toward the locus of conflict, the central location or dwelling place of conflict. Selecting the locus of conflict provides the researcher with a conceptual frame for viewing conflict. Debate on the locus of conflict polarizes into the motive-versus the action-centered definitions (Fink, 1968). The motive-centered advocates con
Industrial Relations, 2001
The first national survey data on interest-based bargaining (IBB) in labor relations reveal broad awareness of IBB, contrasting union and management views, and variation by negotiator experience and gender. A majority of negotiators are aware of IBB, and approximately one-third of management negotiators and nearly one-half of union negotiators report using IBB in prior negotiations. An exploratory analysis of the relationships between IBB preferences and contract outcomes suggests that the process is producing more than a simple "mutual gains" pattern of outcomes. Based on these initial results, two hypotheses are suggested as the focus for future studies of the diffusion and sustainability of IBB in collective bargaining.
On striking for a bargain between two completely informed agents
Economic Theory, 2008
This paper provides a thorough equilibrium analysis of a wage contract negotiation model where the union must choose between strike and holdout between offers and counter-offers. When the union and the firm have different discount factors, delay in reaching an agreement may Pareto dominate many immediate agreements. We derive the exact bounds of equilibrium payoffs and characterize the equilibrium strategy profiles that support these extreme equilibrium payoffs for all discount factors. In particular, our analysis clarifies open issues on the maximal wage in this model when the union has a higher discount factor than the firm.
Bargaining with informational and payoff externalities
Journal of Economics & Management Strategy, 2020
This paper studies a dynamic bargaining model with informational externalities between bargaining pairs. Two principals bargain with their respective agents about the price for their work while its cost is agents' private information and is correlated between them. Depending on the equilibrium, information from the other pair helps or hinders principals' ability to offer low prices. A higher correlation can then either increase or decrease principals' payoffs, delay, and welfare. 1 | INTRODUCTION How should principals bargain with their agents when there are informational linkages between the negotiations? Consider manufacturers who want their exclusive retailers to undertake a demand-increasing activity which has costs unknown to manufacturers but correlated between the retailers. A manufacturer can wait and see what other retailers do while a retailer anticipates what they will do and might agree earlier. When is the agreement reached? Is it inefficiently delayed or advanced? How does the competition between the manufacturers affect the timing? This paper studies a situation of parallel negotiations under asymmetric information when there are informational externalities between them. It is found the informational externalities have an ambiguous effect on principals' payoffs and welfare. In some cases, stronger informational externalities have a positive effect allowing principals to better adjust subsequent offers. In other cases, they make it harder for the principal to be "tough." Interestingly, while it may seem intuitive that better information should increase incentive to delay contracting, this is not necessarily the case: The agents are strategic and they might agree to a worse offer early if they expect to lose their informational advantage. As another example, consider labor negotiations. Workers are known to have a keen interest in the wages of their peers (Babcock et al., 1996; Dunlop, 1957). Gu and Kuhn (1998) and Kuhn and Gu (1999) argue that this information is useful in their bargaining with the firms. Indeed, wage bargaining between a union and a firm is often assumed to happen under asymmetric information since firms are privately informed about their profits, market prospects, and so forth; the failure to reach an agreement is interpreted as a holdout or a strike. Focusing on bargaining of several unionfirm pairs occurring either simultaneously (Gu & Kuhn, 1998) or sequentially (Kuhn & Gu, 1999), they find a considerable empirical support for the informational spillovers between the pairs in the data of contract negotiations in Canadian manufacturing. In particular, when there are more pairs bargaining simultaneously, negotiations last longer but are less likely end up in a strike. When firms invest abroad, they often learn from each other. Kinoshita and Mody (2001), on a sample of Japanese firms investing into Asian countries in the early 1990s, document that a firm's new investment in an emerging economy is positively correlated with its own previous investment in that economy and also with the current/planned investments by competitors. Globally most FDI take the form of cross-border M&A's rather than greenfield investments. 1 Investing in a foreign country thus usually means contracting with local firms which would negotiate for a better deal. 1 According to UNCTAD (2000), the ratio of the value of global cross-border M&A to the value of global FDI in 1999 was about 80%.
Collective bargaining: empirical and theoretical approaches
The collective bargaining in Portugal have a new legal board, the "hold" one in the beginning appear to be the end of negotiation, but after two years, more or less, the dynamic of the collective bargaining put the numbers (agreements) near to the ones of the old law. The unions and the employer's organizations made some efforts and they reach new agreements, this dynamics is present in some process that we will show in this paper.
The Rationality of Collective Bargaining
Conference Paper, 2017
Human species differ in several ways and qualities from their kinds except in that which drives them to self-interest. According to Thomas Hobbes, man is fundamentally selfish; for he is inclined only to that which pleases him alone. Hobbes calls this principle 'self-interest'. The variety of self-interest and attempts to realize them in an unregulated society lead man to a state of conflict; dispute and anarchy with the other. Hence this condition consequently, makes life for man "short, brutish and nasty" according to Hobbes. The social contract tradition, in its entire ramification, unveils how man surrenders his individual passion for the sake and sustainability of collective interest and corporate existence in a corporate society. The process that makes this end possible is one of collective bargaining. Collective bargaining therefore, implies a process of establishing a certain kind or form of condition known as 'right' and 'duty' between one and the other. In corporate bodies and institutions, collective bargaining and industrial democracy make for peaceful and harmonious working relationship between the employer and the employee. It is a process whereby workers, on one side, and employers, on the other hand, dialogue and reach agreement regarding work conditions and terms of employment. In a nutshell, it is a method of arriving at a wage rate and working conditions using an inclusive dialogic approach between the employer and the employee. In this paper therefore, we shall argue that what is arrived at as end product in collective bargaining and industrial democracy is the creation and establishment of a certain kind of 'rights' and 'duties' between the employer and the employee. These rights and duties, when created, established or formed, constitute the salient points in what is known as the condition of service; hence they make for a soothing and pleasant working relationship between the worker and his employer. If this is true, it therefore means that a certain obligation is involved in collective bargaining. These kind of obligation ensure that these rights and duties enshrined in the condition of service are respected and protected by both parties; i.e. employer and employee since they underline what we perceive as the virtue or rationality of collective bargaining and industrial democracy in human affairs.
A letter to the editor on wage bargaining
Journal of Economic Theory, 1990
The Rubinstein perfect information alternating offers bargaining model is problematic when applied to wage negotiations. A strike or any other industrial action is not an automatic consequence of a delay in reaching an agreement, because production can continue normally also when negotiations take place. This paper extends the Rubinstein model to incorporate the choice of calling a strike, and it is shown that in this model there is no longer a unique subgame perfect equilibrium, and that strikes with a length in real time can occur in equilibrium. Journal of Economic Literature Classification Number: 026.