Collaborative Research on Applying Strategic Bargaining Models in Union Contract Negotiations

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SBR-9423113 Joseph Tracy It is widely believed that U.S. collective bargaining in the 1980s has changed substantially from earlier decades. This perception is supported by a decline in strike activity, which labor leaders argue is due to the increased propensity of firms to permanently replace striking workers. This research project examines this claim about the bargaining strategy of firms by developing and then empirically testing a formal theoretical model of the firm's decision to use replacement workers in the course of a labor dispute. The model is also used to assess the impact of various labor policies (e.g., a ban on the replacement of strikers) and to study the impact of the structure of compensation on bargaining outcomes. This research is very timely. This past year, organized labor lobbyed Congress for an amendment to the labor law that would ban the use of permanent replacement workers. Careful consideration of this legislation was hampered by the lack of any comprehensive studies of the likely consequences of such a ban. This research is designed to fill in this important gap in our knowledge. The work on replacement workers will make use of new U.S. data on replacement workers collected for this project and Canadian data on large, private-sector contract negotiations from 1967 to 1993. The work on the impact of the structure of compensation will focus on equity sharing plans (ESOPs) and profit sharing plans using an extensive data set on ESOPs and new firm level data on profit sharing plans in Japan.