First Prize, Co-winner
Industrial relations events such as strikes, slowdowns, or work stoppages can have important economic consequences for firms. These episodes may impact firm-level measures of productivity and output, especially if workers refrain from producing. In cases where output is contractible, adverse conditions of employment may induce workers to lower effort in other dimensions of production, for example, through diminishing the quality of the product. However, a relationship between worker treatment and the quality of production has proved difficult to establish. Since quality is often unobserved or hard to measure, little is known about the impact of adverse labor relations on workers' efforts when they are on the job and even producing at full capacity. This dissertation sheds light on the question of how conditions of employment affect the performance of workers by exploring two natural experiments that allow for direct tests of the effect of labor disputes on product quality. In addition, I present evidence from arbitration systems demonstrating that the precise characteristics of wage settlements can have important implications for the performance of workers.