Union bargaining type determination in the United States steel industry

Abstract

This study examines eleven firms in the US Steel industry and uses Irvine's (2002) union bargaining type determination model to identify union bargaining type. Through OLS and 2SLS time series estimation of the wage determination equation and the labour demand equation, it is shown that five US steel firms operate under a 'Right to Manage' model, two firms operate under an 'Efficient Bargaining' model and in four firms the union has insignificant bargaining ability. This study also tests the suitability of modelling the US steel industry through the Nash Bargaining framework. It is shown that for the majority of the firms, the empirical results are consistent with the predictions made by the extended Nash bargaining framework. Consequently, the Nash Bargaining framework is an appropriate modelling medium in this context.