On strike insurance

A strike insurance is integrated into a model based on one-sided private information of the firm. It is shown that the strike insurance will increase the dispute level if payments to the insurance are lump-sum or if payments from the insurance are proportional to wages. However, if wages affect contributions or if firms receive lump-sum transfers in the case of a dispute, strike activity will fall. Information on the extent of employer strike funds and union strike pay in 16 OECD countries is used to test whether their existence influences strike volume. Regression analyses for the period 1970 to 1996 and for three sub-periods show that while the existence of union strike pay schemes tends to reduce strike volume, countries with strike funds provided by employers' peak confederations are characterised by more strike activity.