Bargaining Power, Strike Durations, and Wage Outcomes: An Analysis of Strikes in the 1880s

Abstract

We study strike durations and outcomes for some 2000 disputes that occurred between 1881 and 1886. Most post-strike bargaining settlements in the 1880s fell into one of two categories: either a union "victory", characterized by a significant wage gain or hours cut, or a union "defeat", characterized by the resumption of work at the previous terms of employment. We find a strong negative relation between strike duration and the value of the settlement to workers, reflecting the declining probability of a union victory among longer strikes. For the subset of strikes over wage increases we estimate a structural model that includes equations for the capitulation times of the two parties and a specification of the wage increase conditional on a union victory. We find strong support for a relative bargaining power hypothesis: factors that enhance the workers’ ability to withstand a strike tend to raise the wage increase in the event of a successful strike, while factors that enhance the employer's ability to withstand a strike tend to lower the wage increase in the event of a union victory.