NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Effect of Collective Bargaining Legislation on Strikes and Wages

Peter C. Cramton, Morley Gunderson, Joseph S. Tracy

NBER Working Paper No. 5105
Issued in May 1995
NBER Program(s):   LS

Using Canadian data on large, private-sector contract negotiations from January 1967 to March 1993, we find that wages and strikes are substantially influenced by labor policy. In particular, we find that prohibiting the use of replacement workers during strikes is associated with significantly higher wages, and more frequent and longer strikes. This is consistent with private information theories of bargaining. We estimate the welfare consequences of a ban on replacement workers, as well as other labor policies. Despite the higher dispute costs, union workers are better off with a ban on replacement workers. The higher wage more than compensates for the more frequent and longer strikes.

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Document Object Identifier (DOI): 10.3386/w5105

Published: Review of Economics and Statistics, Vol. 81, no.3 (August 1999),pp.475-487. citation courtesy of

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