Wage Bargaining under the National Labor Relations Act
Document Type
Article
Publication Date
Winter 2006
Abstract
Sections 8(a)(3) and 8(a)(5) of the National Labor Relations Act (NLRA) prohibit the management of a firm from unilaterally increasing the wage during contract negotiations without the union's approval. We show how the management can strategically increase the wage during negotiations without violating the NLRA. Increasing the wage during negotiations will upset the union's incentive to strike and decrease the union's bargaining power, thereby shrinking the set of equilibrium contracts in the firm's favor. Indeed, as the union becomes more patient, the set of equilibrium wages converges to the best equilibrium outcome to the firm.
Journal Title
Journal of Economics and Management Strategy
Journal ISSN
1058-6407
Volume
15
Issue
4
First Page
1017
Last Page
1039
Digital Object Identifier (DOI)
10.1111/j.1530-9134.2006.00126.x