Working Paper: NBER ID: w17192
Authors: Efraim Benmelech; Nittai K. Bergman; Ricardo Enriquez
Abstract: We analyze how firms renegotiate labor contracts to extract concessions from labor. While anecdotal evidence suggests that firms tend to renegotiate down wages in times of financial distress, there is no empirical evidence that documents such renegotiation, its determinants, and its magnitude. This paper attempts to fill this gap. Using a unique data set of airlines that includes detailed information on wages and pension plans we document an empirical link between airline financial distress, pension underfunding, and wage concessions.
Keywords: labor negotiations; financial distress; pension underfunding; wage concessions; airlines
JEL Codes: G23; G32; G33; J21; J24; J26; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| financial distress (G33) | wage concessions (J38) |
| pension underfunding (H55) | wage concessions (J38) |
| financial distress + pension underfunding (G33) | wage concessions (J38) |