Title

Wage Bargaining under the National Labor Relations Act

Department

Economics, Finance, & Quantitative Analysis

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

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