College of Behavioral & Social Sciences

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Author: search.filters.author.Cramton, PeterSubject: search.filters.subject.labor disputes

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Now showing 1 - 3 of 3
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    Unions, Bargaining and Strikes
    (Edward Elgar, 2002-08-25) Cramton, Peter; Tracy, Joseph
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    Strikes and Holdouts in Wage Bargaining: Theory and Data
    (American Economic Association, 2002-04) Cramton, Peter; Tracy, Joseph S.
    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.
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    ESOP Fables: The Impact of Employee Stock Ownership Plans on Labor Disputes
    (2005-09) Cramton, Peter; Mehran, Hamid; Tracy, Joseph
    By the early 1990s employee stock ownership plans (ESOPs) had become more prevalent in unionized firms than in nonunionized firms. However, little research has been devoted to examining the implications of ESOPs for collective bargaining. Ben-Ner and Jun (1996) model ESOPs as a buyout option for the union. The ownership share of the typical union ESOP, though, is significantly below 50%. In this paper, we extend the signaling model of Cramton and Tracy (1992) to allow partial ownership stakes by the union. We demonstrate that ESOPs create incentives for unions to become weaker bargainers. As a result, the model predicts that ESOPs will lead to a reduction in the fraction of labor disputes that involve a strike. We examine these predictions using U.S. bargaining data from 1970-1995. The data suggest that ESOPs do increase the efficiency of labor negotiations by reducing dispute rates and shifting the composition of disputes from more costly strikes. Consistent with improved bargaining efficiency, we find that the announcement of a union ESOP leads to a 50% larger stock market reaction as compared to the announcement of a nonunion ESOP.