The Effect of Settlement Stage on Negotiated Wage Settlements in Canada

This paper analyzes the effect of the particular stage of wage settlement on the negotiated wage increase, using micro data on Canadian labor contracts between 1966 and 1975. The sample data base was divided into direct first-stage bargaining, mediation-conciliation, and work stoppage/arbitration, and structural wage equations were estimated for each set of data. The results indicate that as negotiations move from direct bargaining to work stoppage, labor market conditions, measured by a vacancy rate, become less important as an explanatory variable and price catch-up becomes more important.