A THEORY OF HOLDOUTS IN WAGE BARGAINING

Holdouts (the continuation of negotiations beyond the contract expiry date) are the most common form of disputes in labor contract negotiati ons. We model holdouts as a delaying tactic employed by unions to obta in information about other bargaining outcomes in their industry. Nove l implications of our model include a positive association between hol dout duration and the number of bargaining pairs negotiating contracts simultaneously; bunching of holdout durations within these ''negotiat ing groups''; and fewer strikes among holdouts which end later in grou ps. Using a large panel of contract negotiations in Canadian manufactu ring, we find considerable support for these predictions.