Abstract
This paper proposes and tests a model designed to study the feedbacks between strikes and wages in an environment more inflationary than that analyzed in previous studies. A model embodies the hypothesis that strike activity and wage changes are jointly determined by the expectations of workers about the future price level, the target rate of growth in their real earnings, and the labor market situation as reflected in the rate of unemployment. The empirical analysis departs from most previous studies by estimating a simultaneous-equation system. The model is tested with data describing the experience in Chile from 1956 through 1973, a period during which strikes were legal and prices rose over 16,000 percent in that country. The results in the main support the propositions of the theoretical model.
Get full access to this article
View all access options for this article.