We present a bargaining model of union contract negotiations, in which the union decides between two threats: the union can strike, or it can continue to work under the expired contract. The model makes predictions about the level of dispute activity and the form disputes take. Strike incidence increases as the strike threat becomes more attractive, because of low unemployment or a real wage drop. We test these predictions by estimating logistic models of dispute incidence and dispute composition for negotiations from 1970 to 1989. We find support for the model's key predictions, but these associations are weaker after 1981.

We study wage bargaining in which the union is uncertain about the firm's willingness to pay and threat payoffs vary over time. Strike payoffs change as replacement workers are hired, as strikers find temporary jobs, and as inventories or strike funds run out. We find that bargaining outcomes are substantially altered if threat payoffs vary. If dispute costs increase in the long run, then dispute durations are longer, settlement rates are lower, and wages decline more slowly during the short run (and may even increase). The settlement wage is largely determined from the long-run threat, rather than the short-run threat.

This article investigates the effect of external, national, and sectoral shocks on Canadian employment fluctuations at the national, industrial, and provincial levels. We assume that employment growth in each industry-province pair depends on U.S. growth, lagged Canadian growth at the national, industrial, and provincial levels, an aggregate shock, and shocks specific to each industry, province, and industry-province pair. We estimate that the U.s. and Canadian shocks account for two-thirds and a quarter, respectively, of aggregate variation. Sectoral shocks account for only one-tenth of aggregate variation but represent 30% of the variation from Canadian sources.

"We argue that the postwar baby boom [in the United States] caused substantial fluctuations in both the economic rewards to education and educational attainment over the last 3 decades. If substitutability between young and old workers diminishes with education, the present value of lifetime earnings for a boom cohort is depressed more for highly educated workers, reducing incentives for educational attainment. The opposite is true for pre- and postboom cohorts. The diminishing substitutability hypothesis explains the declines in both the returns to college and college completion rates in the 1970s and predicts a substantial increase in educational attainment for postboomers."

Understanding the employment dynamics of disadvantaged families is increasingly important. We estimate duration models describing these dynamics for disadvantaged single mothers and use them to conduct a rich set of counterfactual analyses. We use a misreporting model to correct for “seam bias,” the problem that too many transitions are reported between reference periods in panel data. We find effects of demographics, minimum wages, unemployment rates, and maximum welfare benefits, but not policy changes introduced through state welfare waivers, on employment dynamics. We find that two commonly used ad hoc methods of addressing seam bias perform substantially worse than our approach.

In the Netherlands, the average exit rate out of welfare is dramatically low. Most welfare recipients have to comply with guidelines on job search effort that are imposed by the welfare agency. If they do not, then a sanction in the form of a temporary benefit reduction can be imposed. This article investigates the effect of such sanctions on the transition rate from welfare to work using a unique set of rich register data on welfare recipients. We find that the imposition of sanctions substantially increases the individual transition rate from welfare to work.

A wage offer can be either acceptable or unacceptable to a worker, but in cross-sectional and panel data only acceptable wage offers are observed. An OLS wage equation will not reveal how job tenure affects wage offers but rather will reveal how tenure affects acceptable wage offers. By jointly modeling the firm's determination of the wage offer and the worker's decision to accept or reject the offer, we are able to estimate the effect of job tenure on wage offers consistently. In contrast to the usual OLS results, we find that job tenure has no statistically significant effect on wage offers.

Full-information maximum likelihood is used to estimate union wage, hours, and earnings markups. Construction union wage markups are positive (58.2% at the sample means). Since union hours markups are negative (-4.0%) for most demographic groups, union earnings markups (51.1%) are smaller than the wage markups. All exogenous variables are allowed to interact with the endogenous union dummy variable, which allows us to test whether markups vary across demographic groups, whether increased local unionization has a positive spillover effect in the nonunion sector, and whether increased local unemployment equally affects wages and hours in increased local unemployment equally affects wages and hours in the two sectors.