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.
E24, J52, J53, J64, J65.
Keywords: strike rate/volume; quality of labor relations;
labor market institutions; unemployment.