The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd


  • John Kennan
Reference work entry


An economic strike is a suspension of production while workers and their employer argue about how to divide the surplus from their relationship. Modern economic theories of strikes assume that at least one side has private information about the surplus, viewing the lost production as a cost of extracting information. Empirically, strikes are quite rare. There is evidence that strike incidence is high at the peak of the business cycle, but strike duration seems to fall when the economy is strong. Strike activity is evidently influenced by the legislative environment, and particularly by legislation restricting the use of replacement workers.


Attrition Bargaining Collective bargaining Employment surplus Hicks paradox Opportunity cost Private information Replacement workers Screening Signalling Strikes 

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • John Kennan
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