Abstract:
Using international data, we investigate whether the quality of industrial relations matters for the macro economy. We measure industrial relations inversely by strikes - which proxy we cross-check with an industrial relations reputation indicator - and our macro performance outcome is the unemployment rate. Independent of the role of other institutions, good industrial relations do seem to matter: greater strike volume is associated with higher unemployment. Holding country effects constant, however, the sign of the variable is reversed. This fixed-effects result likely picks up a direct effect of strikes, namely, their tendency to rise when striking becomes more attractive to the union.
