Union wages, strikes and profits

Abstract

A model is used to propose the countervailing effects of a strike upon wages. Wages may rise if unions succeed in obtaining concessions. They may fall if firms succeed in neutralizing the potential damage to their profits. Some US evidence suggests that wages fall whenever strikes increase in intensity, somewhat corroborating the view that unions have continued to become weaker over time.

Keywords:

• unions
• wages
• strikes
• profits

JEL Classification:

• A10
• J50

Acknowledgement

Gratitude is extended to Chris Eichbaum, Michael Gilchrist, John MacCormick, Barrie MacDonald, Aaron Mills and to the staff at Victoria University's Industrial Relations Centre and at the Ateneo University.