DP13130 The Power Resource Theory Revisited: What Explains the Decline in Industrial Conflicts in Sweden?

Author(s): Kerstin Enflo, Tobias Karlsson, Jakob Molinder
Publication Date: August 2018
Keyword(s): industrial conflicts, Local Labor Markets, Power Resource Theory, strikes
JEL(s): H53, J51, N34, N44
Programme Areas: Economic History
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=13130

This paper revisits the Power Resource Theory by testing one of its more influential claims: the relation between the strength of the labor movement and the reduction of industrial conflicts. Using panel data techniques to analyze more than 2,000 strikes in 103 Swedish towns we test whether a shift in the balance of power towards Social Democratic rule was associated with fewer strikes. The focus is on the formative years between the first general election in 1919 and the famous Saltsjöbaden Agreement in 1938, the period when Sweden went from a country of fierce labor conflicts to a state of industrial peace. The spatial dimension provides new possibilities to test the theory. We find that Social Democratic power reduced strike activity, but only in towns where union presence was strong. Powerful unions in themselves did not reduce local strike activity. On the contrary, we find that the rise of the Social Democratic Party in municipal governments offset about 45 percent of the estimated effect of growing union presence on industrial conflicts. We do not see any significant tangible concessions in terms of increased social spending by local governments after a left-wing victory as predicted by Power Resource Theory. Instead the mechanism leading to fewer strikes appears to be related to corporatist explanations.