Centralization and strikes

Abstract

Existing models of the effects of bargaining structures on bargaining outcomes have not, to date, incorporated the social learning which occurs when a sequence of union-firm pairs bargain over wages. In this paper, we explore the effects of centralization in bargaining along three dimensions – formation of a national union, formation of an employer association, and the movement from sequential to simultaneous negotiations – using a model which allows such learning to occur. The predicted effects of centralization on wages and strikes are complex, depending on both the dimension in which it occurs, and on the pre-existing level of centralization in other dimensions. Interestingly, however, under no circumstances does the model unambigously predict a decrease in strikes with centralization.