Striking workers lose bargaining power as pay-offs decline over time
Workers' pay decreases during a strike, affecting wage negotiations. The wage in these negotiations is influenced by the workers' outside options, even if it doesn't directly impact their decisions. In cooperative settings, the workers' disagreement point is a mix of strike pay and outside options, based on how long they can sustain a strike. This study supports the idea that unemployment rates play a role in determining wages in bargaining situations. In economies where firms negotiate wages and workers have strike limitations, equilibrium unemployment can exist.