Competition and Openness: to What Extent Do they Explain the decline in US Strike Activity?

This paper develops a theoretical model that may shed some light on the decline of strike activity in many Western economies in recent years. The model’s focus is on protracted strikes that are used in pursuit of wage demands. It proposes that strikes adversely affect employment, particularly in primary sector labour markets, first, by raising prices in product markets and, second, by branding strike-affected firms as unreliable suppliers. The model suggests that increased competition in product markets and high levels of unemployment go some way to explaining the decline in strike activity.