Essays on unionism.

Abstract

This dissertation consists of three chapters on unionism. In the first chapter, the relation between wage indexation and corporate rate of return is examined. The model developed in the chapter predicts that: (i) shareholders bearing a great risk of inflation in an indexed contract require a high rate of return as a risk premium; and (ii) the negative relation between the rate of return and unexpected inflation becomes more apparent as a contract provides generous wage indexation to workers. Based on multiple sources of data, the empirical analysis confirms these predictions: (i) firms with indexed contracts face a higher required rate of return than with a non-indexed contract; and (ii) the negative relation between unexpected inflation and the required rate of return is more apparent if wage indexation exists in the contract. The second chapter investigates the determinants of labor disputes in Korea. Despite the fact that holdouts are extremely common in Korea, they have been generally ignored in the literature. The incidence of labor disputes, which include holdouts as well as strikes, seems to be affected by business conditions, employer's bargaining position, and established relationship with unions. However, evidence for the asymmetric information model documented by U.S. empirical studies is not found in the Korean cases. Similar results are reported in the Japanese case. One explanation is that Korea and Japan share much in common in terms of bargaining structure, such as enterprise unionism and work councils, while the U.S. bargaining structure is quite different from those countries. A theoretical model developed in the third chapter explains bargaining structure as the result of unions' choices. Based on the assumption that two contracts occur in sequence, the model shows that each union has a different preference over bargaining structure. Using a simple game theoretical framework, the equilibrium bargaining structures are not unidirectional with respect to a union's bargaining power. This prediction of the model may explain why the results in empirical studies on U.S. bargaining structure are inconclusive.