Negotiating with Labor Under Financial Distress

Efraim Benmelech; Nittai K Bergman; Ricardo Enriquez

doi:10.3386/w17192

Negotiating with Labor Under Financial Distress

Efraim Benmelech, Nittai K Bergman, Ricardo Enriquez

Research output: Working paper

Abstract

We analyze how firms renegotiate labor contracts to extract concessions from labor. While anecdotal evidence suggests that firms tend to renegotiate down wages in times of financial distress, there is no empirical evidence that documents such renegotiation, its determinants, and its magnitude. This paper attempts to fill this gap. Using a unique data set of airlines that includes detailed information on wages and pension plans we document an empirical link between airline financial distress, pension underfunding, and wage concessions.

Original language	English
Place of Publication	Cambridge, Mass
Number of pages	48
DOIs	https://doi.org/10.3386/w17192
State	Published - Jul 2011
Externally published	Yes

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Name	NBER working paper series
Publisher	National Bureau of Economic Research
No.	17192

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title = "Negotiating with Labor Under Financial Distress",

abstract = "We analyze how firms renegotiate labor contracts to extract concessions from labor. While anecdotal evidence suggests that firms tend to renegotiate down wages in times of financial distress, there is no empirical evidence that documents such renegotiation, its determinants, and its magnitude. This paper attempts to fill this gap. Using a unique data set of airlines that includes detailed information on wages and pension plans we document an empirical link between airline financial distress, pension underfunding, and wage concessions.",

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Negotiating with Labor Under Financial Distress

Abstract

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