Analyses of strike behavior rarely take account of prior learning and experience of bargainers. We show that experienced bargainers have fewer strikes than others and that differences in strike activity across U.S. manufacturing industries vary inversely with the estimated cost of striking. The cost of striking is measured as an inverse function of the ease of substituting pre- and poststrike production for strike-inhibited output. The occurrence of strikes, among rational and experienced bargainers, is attributed to the cost of designing contingent contracts applicable to unlikely circumstances, relative to the expected cost of strikes in such circumstances, absent contingent contracts.

Analyses of strike behavior rarely take account of prior learning and experience of bargainers. We show that experienced bargainers have fewer strikes than others and that differences in strike activity across U.S. manufacturing industries vary inversely with the estimated cost of striking. The cost of striking is measured as an inverse function of the ease of substituting pre- and poststrike production for strike-inhibited output. The occurrence of strikes, among rational and experienced bargainers, is attributed to the cost of designing contingent contracts applicable to unlikely circumstances, relative to the expected cost of strikes in such circumstances, absent contingent contracts.

This paper provides an empirically tractable version of a job-search model. The model is estimated using data on a sample of workers who were laid off when their plants closed. A generalization of the empirical model which allows for reservation wages to change over duration of unemployment is provided and estimated. Reservation wages are found to decline significantly with duration. Applications of the model and the estimates to explain diverse labor market phenomena are provided.

This paper provides an empirically tractable version of a job-search model. The model is estimated using data on a sample of workers who were laid off when their plants closed. A generalization of the empirical model which allows for reservation wages to change over duration of unemployment is provided and estimated. Reservation wages are found to decline significantly with duration. Applications of the model and the estimates to explain diverse labor market phenomena are provided.