Bargaining Strength Research Articles

War power through restraint: The politics of unilateral military action after 1945

AbstractFrom a historical perspective, presidents have frequently directed the use of military force without explicit permission from Congress. Yet, presidents still court legislative approval on select occasions. Why do presidents sometimes seek congressional authorization and other times do not? I explain authorization‐seeking behavior according to variations in presidential bargaining strength. I argue that both weak and strong presidents prefer authorization‐seeking; by obtaining congressional backing, weak presidents conceal a lack of national resolve from international audiences, while strong ones use approval to enhance their coercive authority. Presidents with mid‐level bargaining strength, however, prefer unilateral action; on the one hand, unilateral action may demonstrate resolve in the face of potential legislative resistance, while on the other, it avoids contentious debate that risks “muddying” the diplomatic waters. I illustrate these arguments by revisiting four prominent historical cases: the Korean War, the Gulf of Tonkin crisis, the invasion of Cambodia, and the Persian Gulf War.

The Causal Effect of Early Marriage on Women's Bargaining Power: Evidence from Bangladesh

Abstract Early marriage restrains women's agency and bargaining strength in postmarital households, impairing their ability to make meaningful contributions to household decision making. This paper employs a comprehensive measure of women's empowerment in the domestic and productive spheres, and isolates the causal effect of age at marriage, instrumented by age at menarche, on their bargaining strength, using nationally representative data from Bangladesh. Results suggest that delayed marriages result in significantly higher empowerment scores and probability of being empowered for women, because of higher likelihood in achieving adequacy in their autonomy in agricultural production, control over income, ownership of assets and rights in those assets, and ability to speak in public. Favorable impacts of delayed marriage are also found on women's freedom of mobility, fertility choices, and their ability to decide on household expenses and investments, with the impacts likely coming via improvements in education and labor market outcomes when women married later.

An Evidence-Based Approach to Private Ordering

Private ordering – where private actors regulate, enforce, and resolve disputes on their own – has in recent years expanded across business, commercial, and financial sectors. Parties have economic and reputational incentives to take this approach over adjudication by the courts. Parties may prefer private ordering for reasons of process, substance, or both. Even when disputes come before them, courts often defer to parties’ private ordering. Their rationale is that the parties possess a stronger understanding of their intentions than do the courts. This strong assumption, however, depends on parties’ knowledge and relative bargaining strength. In many instances, parties operate under incomplete or imperfect information; additional information could allow parties to enter into more efficient and more fair agreements ex ante, while better informing courts’ approach to adjudicating disputes arising from private ordering ex post. The emergence of artificial intelligence (AI) in legal technology – specifically, in its ability to analyse vast amounts of data – can help advance this augmented informational objective. If made broadly accessible, AI has the potential to equalize information and bargaining power between parties. An empirical evaluation of the validity of assumptions that underpin the general support for private ordering can also be instructive for judges. For this reason, courts have an important role to play in the evolution of private law. Their ability to understand and harness AI can lead in the short term to more effective judicial oversight with respect to private ordering. Over the long term, courts can empower parties to make more informed choices when interacting with one another, reducing inefficiencies and rents.

Small but powerful—local value chains and sustainability‐oriented approaches in the agri‐food sector

AbstractRegional and local value creation is seen as one solution for reducing the environmental impact of the agri‐food system. The point of reference for this research is the powerless position of small actors in agri‐food chains. This paper gives insights into the motivation of small‐scale producers in developed countries to exit national and export markets and to opt for a sustainability orientation. Specifically, we explore how the powerlessness of small actors in global value chains may fuel the formation of regional and local value chains. Through a regional case study, we map the dairy value system and identify three different value chain structures in the Northern German dairy industry. Then, we illustrate how some small (organic) raw milk producers have changed their position in the value chain and bargaining strength by following different upgrading strategies. Their increase in bargaining power comes with efficiency losses and increased risk. Implications for small‐scale producers and society are discussed and brought together in a framework that demonstrates the drivers and challenges for sustainability‐oriented small‐scale agricultural producers to achieve a stable and competitive position within the market.

Climate Change Regulations of Corporations in Tanzania: A Case for Dilute Interventionism and Veto Firewall Paradigm

Corporations operating in developing countries generally adopt an obstructionist approach to climate change and environmental regulation, particularly in states with weaker economic bargaining strength. Tanzania is one of the African states suffering the disproportionate impacts of climate change but with a weak regulatory capacity to restrain adverse corporate climate change impacting activities. This article critically analyses the climate change regulatory framework of corporations in Tanzania and proposes the implementation of the Dilute Interventionism Model as an innovative solution for regulating corporate activities in climate change mitigation in the country. The model combines prescriptive and facilitative measures in regulating corporations to mitigate the effects of climate change. The article also identifies the need for Veto Firewall protection to safeguard the independence of the sole independent regulator established to regulate the climate change activities of corporations in Tanzania. This article adopts the Dilute Interventionism Pyramid which depicts the steps required to implement the Dilute Interventionism Model in Tanzania. The challenges to the implementation of the Dilute Interventionism and Veto Firewall Paradigm in Tanzania are also discussed, including resistance from corporations, inadequate funding, and lack of technical capacity and the potential solutions to these challenges are briefly highlighted.

Climate Change and Corporate Regulation: A Critical Analysis of Egypt’s Legal and Regulatory Regime

Corporations operating in African states generally have apathy to climate change/environmental regulation, owing to their weak economic bargaining strength in these states. Egypt is one of the African states suffering the disproportionate impacts of climate change and although it has drawn up several climate policy documents, it has not yet enacted a Climate Change Act and has a weak regulatory capacity to restrain adverse corporate climate change-impacting activities. This article critically analyses the legal/ regulatory regime in Egypt for regulating corporate participation in climate change mitigation and its effectiveness in addressing climate change challenges. It critically analyses the implementation of the Dilute Interventionism Model. It evaluates the required legislative framework, regulator, and technical expertise necessary for its successful implementation. This paper also highlights the importance of the Veto Firewall protection to maintain the independence of the sole independent regulator responsible for regulating the climate change activities of corporations. This paper argues that the Dilute Interventionism Model, in conjunction with the veto firewall paradigm, provides a practical and effective approach to regulating corporations. However, successful implementation will require political will, corporate compliance, and technical capacity. This paper provides policymakers, stakeholders, and interested parties in Egypt and elsewhere with useful insights for addressing climate change challenges.

Keeping Healthcare Workers Safe Through Policy Initiatives

Keeping Healthcare Workers Safe Through Policy Initiatives

It ain’t where you’re from, it’s where you’re at: Hiring origins, firm heterogeneity, and wages

Sequential auction models of labor market competition predict that the wages required to successfully poach a worker from a rival employer will depend on the productivities of both the poached and poaching firms. We develop a theoretically grounded extension of the two-way fixed effects model of Abowd et al. (1999) in which log hiring wages are comprised of a worker fixed effect, a fixed effect for the “destination” firm hiring the worker, and a fixed effect for the “origin” firm, or labor market state, from which the worker was hired. This specification is shown to nest the reduced form for hiring wages delivered by semi-parametric formulations of the canonical sequential auction model of Postel-Vinay and Robin (2002b) and its generalization in Bagger et al. (2014). Fitting the model to Italian social security records, origin effects are found to explain only 0.7% of the variance of hiring wages among job movers, while destination effects explain more than 23% of the variance. Across firms, destination effects are more than 13 times as variable as origin effects. Interpreted through the lens of Bagger et al. (2014)’s model, this finding requires that workers possess implausibly strong bargaining strength. Studying a cohort of workers entering the Italian labor market in 2005, we find that differences in origin effects yield essentially no contribution to the evolution of the gender gap in hiring wages, while differences in destination effects explain the majority of the gap at the time of labor market entry. These results suggest that where a worker is hired from tends to be relatively inconsequential for their wages in comparison to where they are currently employed.

Unfair Labour Practices in Industrial Relations in Nigeria and the Role of the National Industrial Court

Basically, the relationship between the employer and the employee is taken as regulated by the individual contract of employment with vital aspect of the contract agreed upon by the parties without interference. The reality is that the freedom of contract does not appropriately consider parties who for economic, social and political reason are in a position that hardly can such a party be said to possess any bargaining strength. This invariably creates unfair and uncivilized industrial relation practices. These are practices that do not conform with best practices in the labour circle as may be enjoined by local and international bodies. Although, there are legislations which protect the right of workers, it is amazing they still suffer some unwholesome acts. These practices include Casualization of Workers, Poor Remuneration, Discrimination at Work, Wrongful dismissal and Sexual Harassment; but not limited to the ones mentioned, as the list is unending. Hence the urgent need to curb this menace, that is ravaging the labour sector.The thrust of this paper is to shed light on the unfair labour practices in industrial relations and the role of the National Industrial Court in handling such unfair labour practice. Keywords: Unfair Practices, Employers, Employee, Contract of Employment, uncivilized, National Industrial Court, Worker and Labour DOI: 10.7176/JLPG/119-11 Publication date: March 31 st 2022

Honest agents in a corrupt equilibrium

AbstractWe present a principal–auditor–agent model with adverse selection where the agent can bribe the auditor and the auditor can extort the agent. We show that it is optimal to deter extortion but allow bribery, and we analyze the impact of honest agents in this setting. Unlike strategic agents, honest agents refuse to bribe and therefore cannot reap the benefit of bribery. This unwillingness to bribe raises the cost of participation of honest agents and creates a negative externality by offering a scope for rent to all strategic agents. This negative externality is larger when an agent's bargaining strength is higher. We find that the principal's payoff is nonmonotonic in honesty, and increasing honesty is helpful only if it is widespread enough, leading to a potential corruption trap. We also show that an increase in productivity lowers the threshold for honesty to be beneficial.

Implications of Mediated Market Access—Exploring the Nature of Vertical Relationships within the Croatian Wine Industry

The aim of this research was to provide a better understanding of factors influencing the performance of (small) agricultural producers. Considering the importance of agricultural producers, not just for maintaining a steady supply of products but also for the preservation of the population (and cultural tradition) of rural areas, the development of sustainable agricultural business is a matter of public interest. This paper considers wine producers and their market channels, i.e., the factors influencing the relationship between wine producers and market intermediaries, by applying ideas taken from agency theory. We developed a conceptual model with our defined measure of agency costs as the mediator variable between multiple regressors and the firms’ financial and non-financial performance as regressions. We used the approach of Baron and Kenny to investigate whether agency costs act as a mediator variable. The data needed to test the proposed conceptual model were collected through questionnaires and contextual interviews with the Croatian wine producers (n = 124). We found that more self-reliance in the distribution process, supported by factors related to the bargaining strength, had a positive influence on wine producers’ performance. The results also support the assumption that agency costs act as a full mediator variable between a producer’s attributes and its performance.

Household indebtedness, distribution, and bargaining power under distribution-induced technological change: a macroeconomic analysis

We present a stylized model to explore the interaction between household debt, functional income distribution, and technological change. We assume that weak labor bargaining power allows firms to set their mark-ups in order to meet a target profit rate. At a low wage share, workers’ households are assumed to have limited flexibility in meeting financial goals, so household indebtedness tends to rise as the wage share falls. Rising indebtedness further lowers labor's bargaining power, a phenomenon that was observed in the wave of financialization that began in the late twentieth century. Thus, rising debt levels allow firms even greater freedom to raise their target profit rate. We find that the dynamics can be either stable or unstable, with the potential for a self-reinforcing pattern of rising household indebtedness and falling wage share, consistent with trends in the US from the 1980s onward. The unstable cycle can be triggered by increased willingness by workers to incur debt and rising influence of household indebtedness on labor's bargaining strength and income distribution. The model can shed some light on widely observed trends over recent decades regarding household indebtedness, inequality, and technological changes in the US, and potentially in other OECD countries.

Optimal Regional Labor Market Policies

We document large and persistent spatial dispersion in unemployment rates, vacancies, labor market tightness, labor market flows, and wages for Germany on a granular regional level. We show that in the 1990s differences in inflows from employment to unemployment were the key driver of regional dispersion in unemployment rates while in the 2000s outflows became more important. To account for the documented regional dispersion we develop a spatial search and matching model with risk-averse agents, endogenous separations and unobservable search effort that leads to moral hazard and quantify the relative importance of 4 potential structural driving forces: dispersion in productivity, in the bargaining strength of workers, in idiosyncratic risk components and in regional matching efficiency. Based on region-specific estimates of these factors we then study the resulting policy trade-off between insurance, regional redistribution and efficiency. We design (optimal) region-specific labor market policies that can be implemented using hiring subsidies, layoff taxes, unemployment insurance benefits and transfers financed by social insurance contributions. We find that a move towards an optimal tax system that explicitly conditions on regional characteristics could lead to sizable welfare and employment gains.

It Ain't Where You're from, It's Where You're at: Hiring Origins, Firm Heterogeneity, and Wages

We develop a theoretically grounded extension of the two-way fixed effects model of Abowd et al. (1999) that allows firms to differ both in the wages they offer new hires and the wages required to poach their employees. Expected hiring wages are modeled as the sum of a worker fixed effect, a fixed effect for the “destination” firm hiring the worker, and a fixed effect for the “origin” firm, or labor market state, from which the worker was hired. This specification is shown to nest the reduced form for hiring wages delivered by semi-parametric formulations of the sequential auction model of Postel-Vinay and Robin (2002b) and its generalization in Bagger et al. (2014). Using Italian social security records that distinguish job quits from firings and layoffs, we find that origin effects explain only 0.7% of the variance of hiring wages among job movers, while destination effects explain more than 23% of the variance. Across firms, destination effects are more than 13 times as variable as origin effects. Interpreted through the lens of Bagger et al. (2014)’s model, this finding requires that workers possess implausibly strong bargaining strength. Studying a cohort of workers entering the Italian labor market in 2005, we find that differences in origin effects yield essentially no contribution to the evolution of the gender gap in hiring wages, while differences in destination effects explain the majority of the gap at the time of labor market entry. These results suggest that where a worker is hired from is relatively inconsequential for his or her wages in comparison to where he or she is currently employed. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Intra-household Bargaining, Son Preference and the Status of Women in India

Son preference prevails among Indian families. We test the hypothesis that women who bear sons experience an elevated status within the household, which translates into their increased role in decision-making. Using data from the Indian Human Development Survey, we find that women who have given birth to at least one son show greater participation in the household’s financial decisions as well as other decisions on a regular basis. After analysing 13 decision variables, we find that women who have given birth to at least one son enjoy higher overall bargaining power in the household. For example, in decisions concerning what to spend money on, having a son is equivalent to 6 years of formal education. We also show that the presence of a senior member in the household, however, often reduces the women’s household bargaining strength. JEL Classification Codes: J11, J12, J13, D190

Nonfinancial Stakeholder Orientation and Conditional Accounting Conservatism

This study examines the relation between conditional accounting conservatism and nonfinancial stakeholder orientation. Using the staggered passage of constituency statutes to identify increases in nonfinancial stakeholder orientation, we document that firms report more conservatively after statute adoption. Cross-sectional analyses indicate the increase in conditional conservatism after statute enactment is more pronounced for firms with higher agency costs between shareholders and managers, and less pronounced for firms with customers that have greater bargaining strength. Collectively, our study sheds light on how the increasing trend of nonfinancial stakeholder orientation plays a role in shaping financial reporting practices.

The Saga Continues: contestation of EU trade policy

ABSTRACT Trade policy constitutes a significant part of the European Union's (EU) foreign policy. The EU's emphasis on global trade liberalization in the 21st century is most evident through its ever increasing number of modern, deep, bilateral trade agreements. However, aspects of EU trade policy and bilateral agreements are hotly contested. We examine this by comparing the rhetoric employed by European civil society organizations from 2013 through 2020. While the focus of contestation and the rhetorical strategy remained fairly consistent, the effects of contestation (politicization, institutionalization of new processes) changed, largely due to the presence or absence of negotiations on a deep trade agreement with an economic and political equal perceived to have greater bargaining power. This study contributes to the literature on norm contestation and politicization by providing empirical evidence that mere contestation is insufficient for politicization, and by showing show that perceived bargaining strength influences trade politicization.

Enriching the Lives of Marginalised Sections: Case of MGNREGS in Composite Andhra Pradesh, India

The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) initiated in 2006 is essentially a reaction to the jobless growth witnessed in the post-1991 reforms period. The Scheme seeks to improve the livelihoods of the marginalised sections in rural areas by generating wage employment. The article is an attempt to examine if the Scheme is really benefitting these sections as envisaged. Our village survey data of composite Andhra Pradesh (AP) brings to the fore the fact that the socially lowly placed scheduled castes (SCs), scheduled tribes (STs) and other backward castes (OBCs) were well represented among the beneficiaries of the Scheme, female participation in the Scheme was way beyond expectations, the Scheme was indeed the mainstay of the illiterate and the little educated that look for manual labour, and the otherwise rarely preferred elderly of the labour market found place in the Scheme and they could make significant contribution to earnings of poor households. It further throws up the finding that the Scheme was an important employment avenue to reckon with in the rural labour market and therefore, it increased the bargaining strength and the reservation wage rate of the labour force. Briefly, the Scheme contributed to inclusive growth.

Do Public Subsidies of Union Membership Increase Union Membership Rates?

Using administrative linked employer-employee data for Norway we estimate the impact of changes in tax subsidies for union membership on individuals’ membership probabilities. Increased subsidisation of the union good increases union take-up, while increased union fees reduce the demand for membership. The price elasticity of demand for union membership is -7 percent in 2012 (the last year for which we have data) though effects are heterogeneous across types of worker. In the absence of the hikes in tax subsidies and holding workforce composition constant aggregate private sector union membership density would have fallen by 5 percentage points between 2001 and 2012. Since membership fees are a substantial part of unions’ total revenues the findings have important implications for unions’ viability. They are also significant because union bargaining strength, which is often proxied by union density, affects a range of social, economic and political outcomes.

Green sourcing practices in Korea

PurposeBased on the empirical findings from a survey of Korean firms with greater environmental risks, this paper aims to identify variables that either promote or inhibit the successful implementation of green sourcing strategy and to evaluate the effects of green sourcing on the firm’s supplier selection, waste management, packaging and regulatory compliance.Design/methodology/approachTo help multinational firms configure an environmentally conscious (green) sourcing strategy, this paper conducted a mail-questionnaire survey and then analyzed the survey results obtained from more than 300 valid responses by using a series of multinomial logistics regression, ordinal regression and discriminant analyses. In addition, the authors performed a cluster analysis, chi-square tests of independence and cross tabulation to analyze the data.FindingsThe authors found that the main driver for the firm’s green sourcing practices is its customer needs and preferences for the environment-friendly product and services instead of peer pressure or government mandates (including environmental regulation). Surprisingly, the authors also found that the firm with a greater purchasing power did not necessarily factor the supplier’s advances in environmental programs into its supplier selection, although the firm’s amount of purchase volume can give it a bargaining strength to pressure its supplier to adopt the environmental programs.Originality/valueA rapid industrialization of Asia-Pacific countries for the past several decades brought unprecedented economic prosperity in those countries. However, it also eroded ecosystem quality gradually through air, water and ground contamination and pollution caused by industrial activities. Such concerns have prompted many firms in the Asia-Pacific region to reassess their up-stream supply chain strategy such as sourcing strategy. This paper is one of the first to examine how Asia-Pacific firms develop such strategy and identify the most common green sourcing practices that can be guidance for other firms embracing environmental programs.