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The Effects of Product Market Competition on Collective Bargaining Agreements: The Case of Foreign Competition in Canada

The Effects of Product Market Competition on Collective Bargaining Agreements: The Case of... Abstract In this paper we estimate the effect of the financial conditions of firms on negotiated wage settlements and on employment using a sample of Canadian collective bargaining agreements from 1965 to 1983. We find that ordinary least squares estimates of the effect of quasi-rents per worker on wages are positive but very small. However, we find a much larger effect when we instrument quasi-rents with measures of foreign competition shocks. We conclude that standard estimates of rent-sharing based on contract data seriously understate the impact of product market competition on negotiated wage settlements. * The authors acknowledge financial support from the Ford Foundation, the National Science Foundation (Grant SES 88-13847 to Abowd), the SSHRC, and the Fonds FCAR (Doctoral scholarship to Lemieux) and from the Industrial Relations Section at Princeton University. The thank David Card, Ronald Ehrenberg, Lawrence Katz, Olivia Mitchell, and an anonymous referee for comments on earlier versions of the paper. They also thank David Card for providing some of the data used in this paper. This content is only available as a PDF. © 1993 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Quarterly Journal of Economics Oxford University Press

The Effects of Product Market Competition on Collective Bargaining Agreements: The Case of Foreign Competition in Canada

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References (7)

Publisher
Oxford University Press
Copyright
© 1993 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology
ISSN
0033-5533
eISSN
1531-4650
DOI
10.2307/2118457
Publisher site
See Article on Publisher Site

Abstract

Abstract In this paper we estimate the effect of the financial conditions of firms on negotiated wage settlements and on employment using a sample of Canadian collective bargaining agreements from 1965 to 1983. We find that ordinary least squares estimates of the effect of quasi-rents per worker on wages are positive but very small. However, we find a much larger effect when we instrument quasi-rents with measures of foreign competition shocks. We conclude that standard estimates of rent-sharing based on contract data seriously understate the impact of product market competition on negotiated wage settlements. * The authors acknowledge financial support from the Ford Foundation, the National Science Foundation (Grant SES 88-13847 to Abowd), the SSHRC, and the Fonds FCAR (Doctoral scholarship to Lemieux) and from the Industrial Relations Section at Princeton University. The thank David Card, Ronald Ehrenberg, Lawrence Katz, Olivia Mitchell, and an anonymous referee for comments on earlier versions of the paper. They also thank David Card for providing some of the data used in this paper. This content is only available as a PDF. © 1993 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Journal

The Quarterly Journal of EconomicsOxford University Press

Published: Nov 1, 1993

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