Sage Journals: Discover world-class research

Abstract

The author develops a model incorporating variables that previous studies have hypothesized as determinants of labor contract duration, then empirically tests the model using a data set containing bargaining pair—specific, industry-specific, and union-specific variables on 373 contracts signed over the period 1977–87. Three findings, all consistent with the model, are that the rate of wage change in a contract is positively related to the contract's duration; contracts containing cost-of-living adjustments (COLAs) tend to be considerably longer in duration than contracts without COLAs; and over the period studied, there was a substantial increase in average contract duration, even with controls for many economic factors.

Get full access to this article

View all access options for this article.

References

Ashenfelter

Orley

, and Johnson

George

. 1969. “Bargaining Theory, Trade Unions, and Industrial Strike Activity.” American Economic Review, Vol. 59, No. 1, pp. 35–49.

Christofides

Louis N.

1985. “The Impact of Controls on Wage Contract Duration.” Economic Journal, Vol. 95, No. 377, pp. 161–68.

Christofides

Louis N.

, and Wilton

David A.

. 1983. “The Determinants of Contract Length: An Empirical Analysis Based on Canadian Micro Data.” Journal of Monetary Economics, Vol. 12, No. 2, pp. 309–19.

Cousineau

Jean-Michel

Lacroix

Robert

, and Bilodeau

Danielle

. 1983. “The Determination of Escalator Clauses in Collective Agreements.” Review of Economics and Statistics, Vol. 65, No. 2, pp. 196–202.

Dye

Ronald

. 1985. “Optimal Length of Labor Contracts.” International Economic Review, Vol. 26, No. 1, pp. 251–70.

Ehrenberg

Ronald

Danziger

Leif

, and San

Gee

. 1982. “Cost of Living Adjustment Clauses in Union Contracts.” Working paper, National Bureau of Economic Research, No. 998, October.

Ehrenberg

Ronald

Danziger

Leif

, and San

Gee

. 1983. “Cost of Living Adjustment Clauses in Union Contracts: A Summary of Results.” Journal of Labor Economics, Vol. 1, No. 3, pp. 215–45.

Fischer

Stanley

. 1977. “Long Term Contracts, Rational Expectations and the Optimum Money Supply.” Journal of Political Economy, Vol. 85, No. 1, pp. 191–205.

Garbarino

Joseph

. 1962. Wage Policy and Long Term Labor Contracts. Washington, D.C.: Brookings Institution.

10.

Gray

Jo Anna

. 1978. “On Indexation and Contract Length.” Journal of Political Economy, Vol. 86, No. 1, pp. 1–18.

11.

Hall

Robert E.

, and Lilien

David M.

. 1979. “Efficient Wage Bargains Under Uncertain Supply and Demand.” American Economic Review, Vol. 69, No. 5, pp. 868–79.

12.

Hendricks

Wallace E.

, and Kahn

Lawrence M.

. 1983. “Cost of Living Clauses in Union Contracts: Determinants and Effects.” Industrial and Labor Relations Review, Vol. 36, No. 3, pp. 447–60.

13.

Kaufman

Roger T.

, and Woglom

Geoffrey

. 1986. “The Degree of Indexation in Major U.S. Union Contracts.” Industrial and Labor Relations Review, Vol. 39, No. 3, pp. 439–48.

14.

Kokkelenberg

Edward C.

, and Sockell

Donna R.

. 1985. “Union Membership in the United States, 1973–1981.” Industrial and Labor Relations Review, Vol. 38, No. 4, pp. 497–543.

15.

Malinvaud

Edmond

. 1972. Lectures on Microeconomic Theory. Amsterdam: North-Holland.

16.

Rosen

Sherwin

. 1974. “Hedonic Prices and Implicit Markets.” Journal of Political Economy, Vol. 82, No. 1, pp. 34–53.

17.

Stieber

Jack

. 1959. “Evaluation of Long Term Contracts.” In Davey

Harold

Kaltenborn

Howard

, and Ruttenberg

Stanley

, eds., New Dimensions in Collective Bargaining. New York: Harper & Brothers, pp. 137–53.

18.

Weiss

Leonard W.

1972. “The Geographic Size of Markets in Manufacturing.” Review of Economics and Statistics, Vol. 54, No. 3, pp. 245–57.

Determinants of Contract Duration in Collective Bargaining Agreements

Abstract

Get full access to this article

References