The Language of Contract:promises and Power in Union Collective Bargaining Agreements

Elliott Ash (ETH Zurich)
W. Bentley MacLeod (Columbia University)
Suresh Naidu (Columbia University)

Abstract: Abstract We document determinants of control rights in union contracts using a new corpus of 30,000 collective bargaining agreements from Canada from 1986 through 2015. Using ideas and methods from computational linguistics, we extract measures of rigidity and worker control from the text of the contract clauses. Motivated by a model of efficient contract design, we analyze how rigidity and authority in contracts varies according to firm-level factors and external factors. We document that contracts impose obligations equally on firms and workers but give entitlements mostly to workers. An increase in personal income tax rates is associated with an increase in worker entitlements, consistent with substitution away from taxed compensation (income) and toward untaxed compensation (control rights as amenities). Lower local sectoral unemployment rates and provincial governance by pro-labor parties is associated with increased worker authority, consistent with effects of changed bargaining power for workers. Worker control also reduces labor conflict: while unanticipated real wage shocks from COLA clauses increase the probability of a strike, this effect is attenuated in contracts with a high degree of worker control.

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