Long-Term Trends in USA Stoppages - An Unobserved Components Approach

The Business Review
Publication Type:
Journal Article
The Business Review, Cambridge, 2007, 9 (1), pp. 9 - 15
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We examine the pattern of annual work stoppages in the USA for the period 1927-2006 to investigate the presence or otherwise of cycles as suggested by Franzosi (2001). The methodology utilized to model the pattern of stoppages is the structural time series modelling approach popularised by Harvey (1989, 1999), which identifies underlying trend and cyclical regularities (if any) in time series data. Evidence is found of two regular cyclical processes around a long-term non-linear trend. These results are operative in the presence of discrete breaks in the series associated with, firstly, World War II and its immediate aftermath and, secondly, a major change in the definition of stoppages introduced in 1982. Forecasts of stoppages are made 10 years into the future. Notwithstanding the well-known limitations of attempting to divine the future, the data suggest that, if the past pattern of trend and cyclical processes continues into the next decade, stoppage rates in the USA will continue to gradually decline. With but few exceptions, there has been a decline in the power and influence of unions around the world over recent decades (Lipset and Meltz 2004, Freeman, Hersch and Mishel 2005, Visser 2006, Blanchflower 2007). This general decline has been reflected in falling union density (the proportion of employees who are union members), falling time-loss rates due to work stoppages (particularly strikes), a decline in the incidence of collective bargaining and a decline in the influence of unions in shaping government policy. Many researchers, who have sought to forecast how union power and influence may develop in the future, have cautiously forecast a continuation of declining power. For example, Calfors et al. (2001) have argued that, so far as European experience is concerned, union power and influence is likely to continue to decline.
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