Does product market competition increase strike activity? Evidence from the UK

Although many studies have examined the effect of labour market characteristics, macroeconomic fluctuations and workplace-level factors on strike activity, much less is known about industry-level determinants of industrial conflict, and in particular the role of product market competition. I examine the effect of competition on strike activity using evidence from a natural experiment of policy reform, the introduction of cartel legislation in the UK in the late 1950s. My econometric analysis, which takes advantage of the fact that different industries were affected to varying degrees by cartel policy, establishes that both the number of strikes and the number of working days lost as a result of strikes increased significantly when competition intensified after the abolition of cartels. I propose an interpretation of these results with reference to theoretical models of bargaining with asymmetric information.