Working Paper: NBER ID: w2137
Authors: John M. Abowd
Abstract: The enterprise (firm) is modeled as a collection of formal and informal contracts providing various factors of production with claims on the income stream in consideration of assets or services supplied to the enterprise. The strongly efficient bargaining model implies that the division of the quasi-rents will result in dollar for dollar exchanges of wealth between the union members and the shareholders. The leading inefficient bargaining models do not imply such tradeoffs in general. The model is tested by considering contract settlements during the years 1976 to 1982 as recorded by the Bureau of National Affairs in Collective Bargaining Negotiations and Contracts. Security price data for the firms were merged with these bargaining unit level settlement data. The tests provide substantial confirmation of the dollar for dollar wealth tradeoff between union members and shareholders.
Keywords: Collective Bargaining; Labor Economics; Shareholder Value
JEL Codes: J51; J52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Changes in collective bargaining agreements (J52) | Changes in the wealth of shareholders (G32) |
| Changes in collective bargaining agreements (J52) | Changes in the wealth of union members (J50) |
| Changes in the wealth of union members (J50) | Changes in the wealth of shareholders (G32) |
| Changes in wage rates (J31) | Changes in shareholder wealth (G39) |