Strikes and Holdouts in Wage Bargaining: Theory and Data
Strikes and Holdouts in Wage Bargaining: Theory and Data
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Publication or External Link
Date
2002-04
Authors
Cramton, Peter
Tracy, Joseph S.
Advisor
Citation
"Strikes and Holdouts in Wage Bargaining: Theory and Data," (with Joseph S. Tracy) American Economic Review, 82, 100–121, 1992. Reprinted in Bengt Holmstrom, Paul Milgrom, and Alvin E. Roth (eds.), Game Theory in the Tradition of Bob Wilson, Berkeley Electronic Press, www.bepress.com/wilson, May 2002.
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Abstract
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.