Negotiating with Labor Under Financial Distress

Efraim Benmelech, Nittai K. Bergman, Ricardo J. Enriquez

Research output: Contribution to journalArticle

Abstract

We analyze how firms renegotiate labor contracts to extract concessions from labor. While anecdotal evidence suggests that firms tend to renegotiate down wages in times of financial distress, there is no empirical evidence that documents such renegotiation, its determinants, and its magnitude. This paper attempts to fill this gap. Using a unique data set of airlines that includes detailed information on wages and pension plans we document an empirical link between airline financial distress, pension underfunding, and wage concessions.
Original languageEnglish (US)
Pages (from-to)28-67
Number of pages40
JournalReview of Corporate Finance Studies
Volume1
Issue number1
DOIs
StatePublished - 2012

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Wages
Negotiating
Labor
Financial distress
Concession
Airlines
Pension plans
Labor contracts
Empirical evidence
Pensions
Renegotiation

Cite this

Benmelech, Efraim ; Bergman, Nittai K. ; Enriquez, Ricardo J. / Negotiating with Labor Under Financial Distress. In: Review of Corporate Finance Studies. 2012 ; Vol. 1, No. 1. pp. 28-67.
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Negotiating with Labor Under Financial Distress. / Benmelech, Efraim; Bergman, Nittai K.; Enriquez, Ricardo J.

In: Review of Corporate Finance Studies, Vol. 1, No. 1, 2012, p. 28-67.

Research output: Contribution to journalArticle

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