Sectoral Shifts and Canadian Unemployment

In this paper Lilien's (1982) hypothesis that sectoral shifts in employment raise aggregate unemployment is tested using Canadian quarterly data. Lilien's framework is extended to investigate regional labour market rigidities and to distinguish between industry shifts that are correlated with changes in aggregate activity, and those which are exogenous to the overall level of activity. The robustness of the results to various changes in model specification is also investigated. I find that in Canada exogenous shifts in employment between sectors do not have a significant effect on the aggregate unemployment rate

An Empirical Study of Dispute Resolution Under an Arbitration System: The Case of British Columbia's Teachers

A data set composed of teachers' contracts in the Canadian province of British Columbia is used to examine the effect of arbitration on collective bargaining outcomes. The data set is unique in that it spans 35 years of arbitration experience. I do not find any evidence of an effect of arbitration on wage rates. Strong positive state¿dependence exists in the data: Bargaining pairs that used arbitration last period are more likely to do so this period. However, the probability of going to arbitration is only marginally increased by arbitrations that occured more than one year in the past. Fixed effects associated with bargaining pairs were not as important as theories which link dispute rates to characteristics of individual bargainers would suggest. No relationship was found between the percentage of arbitrations and levels of macro-economic variables. Some evidence is presented that the moving average of the percentage of arbitrations is high when there is upward pressure on teacher's wages. The coefficient of variation of the Canadian CPI was positively correlated with the percentage of arbitrations, which suggests that economic uncertainty increases the number of disputes. Finally, a simple model of arbitrator behavior proposed by Ashenfelter et al., is remarkably consistent with these data. In particular, I find that arbitrated settlements can be predicted solely on the basis of the negotiated settlements reached in the nine month period prior to arbitration. I also find that the variance of arbitrated settlements is significantly lower than the variance of the preceding negotiated settlements in 13 of 21 years. On the other hand, the estimated coefficients in the prediction equations for arbitrated and negotiated settlements are significantly different, with the arbitrated settlements giving more weight to lagged wage outcomes

An Experimental Test of Rubinstein's Theory of Bargaining

This note reports the results of an experiment which was designed to test Rubinstein's(1982) theory of bargaining. We were particularly interested in how it would compare with the hypothesis that bargainers tend to split a pie 50-50. We duplicated Binmore, Shaked and Sutton's(1986) result that the equal split hypothesis is rejected in a two round game with alternating offers. However, we show that in similar games with more than two rounds Rubinstein's theory is also rejected. Thus their conclusion, that subjects behave as "gamesmen" (i.e. in a manner consistent with the predictions of game theory), was premature. In experiments with varying numbers of rounds, our first players consistently offered their opponents shares equal to the value of the second round pie. In a two round game this behaviour by definition yields offers consistent with Rubinstein's theory. In games with more rounds it does not. In each game, the majority of first players chose to make the same offer. In fact, the regularity of their behaviour is perhaps our strongest result. While neither Rubinstein's theory nor the equal split model explain our findings, the regularity of our subjects' behaviour suggests that there is hope of finding a model of bargaining which does