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Determinants of Contract Duration in Collective Bargaining Agreements

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  • Kevin J. Murphy

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.

Suggested Citation

  • Kevin J. Murphy, 1992. "Determinants of Contract Duration in Collective Bargaining Agreements," ILR Review, Cornell University, ILR School, vol. 45(2), pages 352-365, January.
    • Handle: RePEc:sae:ilrrev:v:45:y:1992:i:2:p:352-365
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    Cited by:

    1. Hsuan-Yu Lin & Chih-Hai Yang, 2016. "Uncertainty, specific investment, and contract duration: evidence from the MLB player market," Empirical Economics, Springer, vol. 50(3), pages 1009-1028, May.
    2. Leif Danziger & Shoshana Neuman, 2005. "Delays in Renewal of Labor Contracts: Theory and Evidence," Journal of Labor Economics, University of Chicago Press, vol. 23(2), pages 341-372, April.
    3. Robert Rich & Joseph Tracy, 2004. "Uncertainty and Labor Contract Durations," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 270-287, February.
    4. Robert Rich & Joseph Tracy, 2013. "Early Contract Renegotiation: An Analysis of US Labor Contracts, 1970-1995," Journal of Labor Economics, University of Chicago Press, vol. 31(4), pages 825-842.
    5. Danziger, Leif, 2008. "Extension of labor contracts and optimal backpay," Labour Economics, Elsevier, vol. 15(1), pages 18-36, February.
    6. Robert W. Rich & Joseph Tracy, 2011. "Early contract renegotiation: An analysis of U.S. labor contracts from 1970 to 1995," Staff Reports 521, Federal Reserve Bank of New York.
    7. Kanago, Bryce, 1998. "The Relation between Contract Duration and Inflation Uncertainty: Further Evidence," Journal of Macroeconomics, Elsevier, vol. 20(4), pages 811-819, October.
    8. Lennox, Gareth D. & Armsworth, Paul R., 2011. "Suitability of short or long conservation contracts under ecological and socio-economic uncertainty," Ecological Modelling, Elsevier, vol. 222(15), pages 2856-2866.
    9. Wallace, Frederick H, 2001. "The Effects of Shock Size and Type on Labor-Contract Duration," Journal of Labor Economics, University of Chicago Press, vol. 19(3), pages 658-681, July.
    10. Nir Klein, 2004. "Long-Term Contracts as a Strategic Device," Bank of Israel Working Papers 2004.16, Bank of Israel.

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