Market Structure, Strike Activity, and Union Wage Settlements

Abstract

We attempt a synthesis of the industrial relations market structure hypothesis with the modern asymmetric information theory of wage and strike outcomes. The industrial relations literature contains arguments indicating that wage settlements should be positively related to the degree of product market sales concentration and the degree of product market coverage by the union. In our empirical analysis of the periods 1970–1980 (strikes) and 1976–1980 (wages), we find that the relation between trade‐adjusted sales concentration and wage settlements is positive at low and intermediate levels of concentration but negative at the highest levels of concentration. The relation is always negative for strike probabilities. We also find that the trade‐adjusted per cent of the product market covered by the same union and the percentage covered by other unions are positively related to both wage settlements and strike probabilities.

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