From conflict to compromise
The importance of mediation in Swedish work stoppages 1907-1927
KERSTIN ENFLO*
TOBIAS KARLSSON**
Paper prepared for the Economic History Society Annual Conference 2017
* email: [email protected], ** email: [email protected]
*, **Department of Economic History, Box 70 83, Lund University, Sweden
Abstract: Institutions for prevention and resolution of labor market conflicts
were introduced all over the world in the early twentieth century. We analyze the
first 20 years of mediation in the Swedish labor market. The Swedish mediators
were personally appointed, enjoyed high levels of social prestige, and were
responsible for conflict prevention and resolution within geographical districts.
Despite limited authority and access to economic resources, we estimate that the
presence of mediation in a conflict resulted in about 30 per cent higher probability
of a compromise outcome. Mediation was more likely to work as intended in
settings where conflicting parties recognize each other and struggle over a prize
that can be divided. By constructing a geocoded panel dataset consisting of all
reported work stoppages in Sweden 1903-27, we aim to disentangle the causal
effect of mediation at the local level. Our results suggest that mediation could
have paved the way for a cooperative atmosphere in the local labour market. At
the national level such an atmosphere was clearly manifested in the General
Agreement in 1938 and with the rise of the Swedish Model.
JEL Code: J52; N33; N34
Key words: conflicts, strikes, mediation, Sweden, hawk-dove game
1
“Jag är här, jag är där,
öfverallt, hvar jag är,
är blott bråk och besvär”1
1. Introduction
Strikes have arguably been the most common, and well-documented, form of social
protest in industrial societies (Cronin, 1978). The increasing importance of strikes, often
associated with the formation of trade unions, were seen in a number of countries from
the second half of the nineteenth century onwards (Card & Olson, 1995; Geraghty &
Wiseman, 2008, 2011; Hyman, 1972; Mikkelsen, 1992; Shorter & Tilly, 1974). More or
less all countries also saw the introduction of institutions intended to prevent and regulate
labour conflicts. These institutions showed great variety, with different degrees of state
intervention and compulsion (McPherson, 1955, s. 525). Some countries, including Great
Britain, relied on private initiatives that emerged in certain branches of industry and the
establishment of quasi-parliamentary bodies, so called conciliation boards (Hicks, 1930).
In other countries, with New Zealand and Australia as prominent examples, the state took
a more active part in regulating the labor market by the means of arbitration.2 Many
other countries, among these Sweden, tried to encourage and establish institutions for
mediation, which is the involvement of a third party to assist opposing interest groups in
reaching a settlement.3
Among contemporary observers, as well as present-day scholars, there are
different opinions about the importance of mediation and similar institutions. Analysing
1
English translation from Swedish: “I am here, I am there, wherever I am is but troubles and fuss”. This verse mocked the
expected struggles of the mediators as expressed a popular journal (Hvar 8 dag, 1909, p. 548).
2
Arbitration is when a third party (an individual arbitrator or a panel) reviews the evidence in a dispute a makes a legally
binding decision.
3
The involvement of a third party is what separate mediation from conciliation, whereas its non-compulsory nature sets
mediation apart from arbitration. Our definition of mediation is inspired by Dahrendorf (1959, pp. 228–229).
2
American strikes in the period 1880-1945, Geraghty and Wiseman (2011), maintain that
the U.S. Conciliation Service from 1917 changed the preconditions for labor conflicts,
signaled a less hostile attitude towards trade unions and promoted negotiations.4 In a
study based on the Spanish experiences in the period 1880-1915, Jordi Domenech (2006)
in contrast, finds that state-sponsored mediation “fueled the radicalism of both unions and
employers’ associations”.5 A third view is that mediation and conciliation services are
toothless measures with little real impact. Such a view is implicit in Walter Korpi’s
narrative of the reduced level of industrial conflicts in Sweden (Korpi, 1978, s. 119).
The lack of consensus about the impact of mediation may partly be attributable to
differences in institutional design, context, and the basic nature of labor conflicts. As we
will discuss below, mediation is more likely to work as intended in conflicts over a prize
that can be divided, than in fights over issues the parties are unwilling or unable to
compromise about.
Similarly, lack of consensus may be related to methodological difficulties. Since
mediation by definition is a voluntary measure, selection effects may influence empirical
estimations. As pointed out by Greig (2005), much of the empirical literature on
mediation has failed to address this problem. Mikkelsen (1992, s. 120) has shown that
strike outcomes in Sweden were correlated with the length of work stoppages and
whether the parties were organized. Long conflicts involving organized parties were more
likely to end in compromises. If mediation more often took place in such conflicts, it is
hard to identify a causal effect of mediation. We are not aware of any studies in the
literature on mediation in industrial relations that deals with the problem of selection bias
and estimates causation between mediation and compromise outcomes.
In this paper, we take a closer look at the Swedish system of mediation within the
framework of a general analysis of the determinants of compromise outcomes in work
stoppages for the period 1907-1927; the first 20 years of state-sponsored meditation in
Sweden. This was a period of transition. On the one hand covers it was characterized by
4
Dahrendorf (1959, p. 228–229) Hicks (1932) and Dunlop (1984) are other examples of scholars that have emphasized the
importance of mediation and related institutions for the contribution of more peaceful conditions in the labour market.
5
See also Houpt & Cagigal (2013) who reaches a similar conclusion for a later period.
3
frequent and long conflicts. In these days, Sweden may actually have been the most
strike-prone country in the industrialized world (cf. Shorter & Tilly, 1974). On the other
hand, the period also saw the spread of collective bargaining between organized workers
and firms and the initial steps towards the Swedish Model, later manifested in the
General Agreement of 1938. We use a new database with geocoded information on the
cause, characteristics and outcome of all recorded work stoppages in Sweden,
supplemented with information on the location of mediators. In order to identify the
effect of mediation on compromise outcome we instrument mediation with geographical
distance between the location of the work stoppage and the mediator’s office.
Our contribution is threefold. Firstly, we analyse a labor market that has been
thought of as a role model for other countries, but whose system of mediation has not
been systematically investigated. Secondly, we exploit previously unused micro-data on
work stoppages and the geographical nature of the Swedish system of mediation to assess
issues of causality. Thirdly, we discuss variation over time and the heterogeneity of
conflict causes to analyze whether the importance of mediation changed as the Swedish
system of industrial relations evolved – from a state of violent conflict to labor market
peace. We find that mediation in this context actually did make a difference on whether a
work stoppage ended up in a compromise. Thus, mediation was not only used by parties
who were ready to make concessions in any case. In this way, the Swedish mediation
institution may have contributed to fostering compromises in the decades preceded the
fall in the frequency of conflicts and the rise of the famous Swedish Model in the labor
market.
The paper proceeds as follows: section 2 reviews economic theories on labor
conflicts in relation to mediation; section 3 gives a historical background to the Swedish
system of mediation; section 4 introduces the data on work stoppages and outlines some
patterns over time; section 5 presents the empirical strategy and the results; section 6
looks closer at interaction effects; section 7 concludes.
4
2. Economic theories on labor conflicts and mediation
For neoclassical economists, the existence of strikes about wages has been a puzzle
(Kennan, 1986). As pointed out by Hicks, strikes tend to decrease the overall size of the
surplus that is to be distributed, therefore union and employer may in most cases benefit
from avoiding conflict (Hicks, 1932). The fact that conflicts do occur is often explained
by the existence of information asymmetries between employers and trade unions, or
between union leaders and members. Depending on the nature of these asymmetries,
mediation and similar institutions may be able to prevent strikes and lockouts. However,
the issue we address in this paper is whether mediation can help to solve conflicts once
they have started.
Whether we can expect mediation to make a difference depends on the basic
nature of labor conflicts: are conflicts essentially all-out brawls between employers and
workers, where the winner takes it all, or are the parties rather struggling over the
distribution of a surplus that can be divided in various ways? The former situation can be
described as a war of attrition, where the parties fight against each other until one party is
exhausted and surrenders (Maynard Smith, 1974). In this model, conflicts have binary
outcomes – one party wins, the other loses. In economic history, war-of-attrition models
have used to characterize and analyze labor conflicts in the late nineteenth century
America and in Canada in the 1920s; contexts where employers did not recognize trade
unions (Card & Olson, 1995; Geraghty & Wiseman, 2008; Huberman & Young, 1999,
2002). In a war-of-attrition framework, there is hardly any scope for negotiation since the
price that is contested (most often union recognition) is indivisible. Thus, mediation
cannot be expected to solve conflicts once they have started.
The latter situation, where employers and trade unions recognizes each other and,
at least in principle, can bargain and reach compromises can be described in terms of a
hawk-dove game (a k a game of the chicken).6 The game is illustrated in figure 1, for a
case where the contested surplus is equal to 1. In the game each party chooses whether to
6
See Rasmusen (2007) for a general discussion on the hawk-dove game and Geraghty and Wiseman (2011: 520-521) for
the application to labour conflicts that we follow here.
5
fight or compromise. If both parties choose compromise, each party receive the reward α.
If both parties choose to fight, the surplus is outweighed by the costs of the conflict and
the parties receive -. If one party choose confrontation and the other concession, the
surplus is unevenly divided; the conceding party shows weakness receives  and the
party that chooses to continue the fight who receives the rest of the surplus (1-). The
nature of the game is such that the best outcome for a party is obtained by showing
strenght (continue to fight) when the other is showing weakness (offer to compromise).
The second best outcome for a party is obtained when both parties choose to
compromise. The third best outcome is when associated with a unilateral offer to
compromise and the worst solution occurs when both parties choose to fight. Thus,  > 1 > α > .
Workers
Firm
Compromise
Fight
Compromise
α, α
, 1-
Fight
1-, 
-, -
FIGURE 1. ILLUSTRATION OF A HAWK-DOVE GAME IN THE LABOR MARKET
Source: Adapted from Geraghty & Wiseman (2011: 521).
Basically, the hawk-dove game suggests that the likelihood of compromise outcomes
depends on the costs of conflict (-), and the rewards for bilateral compromise (α) and
unilateral compromise (), respectively. State intervention in the labor market in the form
of mediation would in the hawk-dove game remove some of the weakness associated
with making a unilateral compromise offer; or in other words, increase the value of , and
the likelihood of a compromise outcome. Such an effect of mediation has been
demonstrated by Geraghty and Wiseman (2011) for the American government policy
during World War I. They also speculate about similar results of government intervention
had earlier been achieved in the UK and France.
6
As will be seen in the following sections, we have reasons to assume that the
hawk-dove game is a better characterization of Swedish labor conflicts in our period of
observation than the war-of-attrition game. This suggests that mediation could have made
a difference. However, this does not mean that all conflicts were hawk-dove games or
that the reward structure was the same in all kinds of conflicts. Moreover, as pointed out
by Geraghty and Wiseman, government involvement in the labor market need to be
perceived as impartial, otherwise it can have effects opposite from those originally
intended. For contemporary observers in Sweden, it was far from obvious that statesponsored mediation would foster peace between firms and workers.
3. Historical background
Sweden was in many ways influenced by initiatives abroad to create institutions for
resolution of labor conflicts in the latter part of the nineteenth century. Early
representatives of the labor movement, including those who endorsed socialist ideals,
were often positive to the idea of arbitration and related measures and there are examples
of conflicts that were resolved in this way, but without direct state intervention (Lundh,
2006; Westerståhl, 1945, p. 174–176). Permanent committees for arbitration were
initiated locally in Stockholm in the painting and building industries (1895 and 1900,
respectively) and nationally in the printing industry (1897, for wage matters). As the
labor movement grew stronger, and due to difficulties of finding impartial negotiators,
the support for mediation and arbitration weakened (Westerståhl, 1945, p. 176–177). Big
firms, who also were about to build own organizations, were less passionate about the
involvement of third parties in conflicts. Thus, in the first years of the twentieth century,
the Confederation of Labor (LO) and the Swedish Employers’ Confederation (SAF) were
united in their rejection of arbitration, also in disputes concerning rights.7
7
Instead, it was representatives for small-scale employers who were the primary advocates of reforms and increased state
intervention
in this area (Westerståhl, 1945, p. 179–180). The Central Confederation of Employers (Centrala
arbetsgivareförbundet), representing handicraft firms, even suggested compulsory arbitration, whenever one of the parties
in a dispute so demanded.
7
Around the turn of the century 1900, that is before the extension of the franchise to
working-class men and women, the Swedish system of political parties was established.
There were basically three party groups – the right, the centre-left (liberals) and the social
democrats. Among the political parties, it was the centre-left that advocated legislation on
mediation most forcefully (Westerståhl, 1945, p. 267–268). It was however a right-wing
government that introduced the first bill on mediation in 1903, suggesting a system with
mediators being responsible for geographical districts. Those who were opposed the
reform thought that mediation had no chances to succeed, particularly given the vast
geographical districts, the limited economic resources set aside for the mediators and
their lack of occupational expertise and authority. A popular journal recalled that the
reform initially was associated with “an air of joke and a certain degree of ridicule”.8 One
of the reasons for why this reform could not achieve immediate support was also that
many politicians preferred a system with tripartite committees, with representatives for
workers, firms and the state. The minority believed that individual mediators would lack
knowledge on the specific conditions in different industries. The argument for having
individual mediators was that such a solution would encourage the spontaneous
emergence of industry-specific or local committees for conflict resolution.9 The most
important ability of the mediator was not branch-specific knowledge, but the ability to
contribute with “calmness, neutrality and objectivity” (70). Implicit in this argument was
a view that many labor conflicts were caused by a heated atmosphere of antagonism
(information asymmetries).
While the mediation bill in 1903 was turned down, a bill with similar content was
passed in 1906. At this point in time, the centre-left, together with the social democrats,
had seized a majority of all seats in Parliament. Yet, the issue was still controversial.
Especially in the Parliament’s first chamber, many voices were raised against the
8
In Swedish: “ett skimmer utaf skämt och i viss grad löje” (”Våra förlikningsmän I”, 1909, p. 548).
9
In 1907/08, almost half of all Swedish collective agreements included stipulations on mediation and/or arbitration. Over
time, such stipulation became less common. Instead, basic rules for the negotiations of new agreements
(förhandlingsordning) were more often made explicit. In 1920/21 54 percent all agreements had such rules, to compare
with 13 percent in 1907/08 (Westerståhl, 1945, p. 182). By that time, 94 percent of the agreements had either clauses on
mediation/arbitration or basic rules for negotiation.
8
mediation bill, for example articulating that similar legislation “had shown to be totally
worthless” abroad. In his defence for the bill, minister of internal affairs Axel Schotte,
emphasized that ”it had often been regarded as a sign of weakness for a warring party to
offer mediation” and that “an official mediation institution, would certainly make
mediation take place more often” (”Medling i arbetstvister”, 1906).10 Needless to say,
this argument reveals a perception of labor conflicts as hawk-dove games.
The mediation bill was finally accepted by the first chamber with 59 votes against
57. The fact that the issue raised so much debate suggest that the reform was not just a
codification of existing practices but represented a new feature in the Swedish labor
market. Another observation worth making is that the mediation act was introduced just
about half a year before the main parties in the labor market, LO and SAF, had formally
recognized each other, in principle; an event known as “the December compromise”. This
event may be seen as an important step in the transition of the Swedish labor conflict
from war of attrition into hawk-dove games.
Sweden in the early 20th century was a country in the process of building institutions
for resolution of labor market conflicts. State mediation was only one of such institutions,
while formation, centralization and bureaucratization of employers’ organisation and
unions were parallel features. Since the initiation of the institution of mediation was
formalized, the share of work stoppages with mediation increased, from 15 per cent in
1907 to 45 per cent in 1927 as seen in figure 2. During the period, the mediator office
also got more resources and became an established part of the institutional setting on the
labor market.
10
In Swedish: ”Det hade ofta ansetts som ett svaghetstecken för en stridande part att erbjuda förlikning, men funnes en
officiell förlikningsinstitution, så skulle förlikning säkerligen oftare komma till stånd”. Note that the term förlikning at the
time did not have the same specific meaning as today.
9
0.5
0.4
0.3
0.2
0.1
0
1907
1911
1915
1919
1923
1927
FIGURE 2. SHARE CONFLICTS WITH MEDIATION
Despite obvious international influences, the Swedish mediation institution got an
original design. In other countries, mediation was most often done by committees with
representatives for employers and workers, chaired by an impartial person and mediation
was often done by industry-level committees. Sweden opted for a different solution.
According to the Swedish legislation on mediation from 1906, mediation services were to
be offered by individual mediators with geographical areas of responsibility. The choice
of a geographical basis for the work of the mediators is interesting, since many existing
institutions for resolution of labor conflicts were also based on occupational and
industrial boundaries. Moreover, the districts were constructed on the basis of knowledge
of previous conflicts.
Another basic feature of the Swedish system of mediation was its limited economic
resources. To some extent, the position of the mediator was an honorary task. The
legislation included a number of specifications on what the mediator should do but
remuneration was not directly related to the work load. The mediators received 25003000 SEK annually, roughly equivalent to the earnings of an ordinary white collar worker
at the time, which was low considering the social background of the would-be mediators.
The number of disputes that the mediator was involved in did not influence their reward,
nor did the length and geographical distance to the conflict.
10
As noted by Klas Åmark (Åmark, 1994, p. 150), the mediators often had a liberal
background. We have been able to identify connections to the liberal parties for about
half of the 27 mediators that were appointed in the period 1906-1927.11 Moreover, the
mediators were prominent figures in society, with prestigious occupations and marks of
distinction. The most common occupational experience was to have served in the legal
system. Ten out of 25 mediators had such a background. Experiences from private
business, the military and academia were relatively rare. Only one of the mediators in this
period had a working-class background, but at the time of his appointment he had already
achieved a high position. As mentioned, the local offices of the mediators were located to
the places where the mediators happened to live. Most of the mediators lived in cities but
not all of them. Four lived outside cities during whole or parts of their periods in duty (26
years in total). It may also be mentioned that the mediator did not always live in the
biggest city of the district. Malmö, the biggest city in the southern district, had for
example no mediator during the period of investigation. Most of the mediators served for
fairly brief periods of time. The median tenure was five years and almost a third of the
mediators served only for one year. New appointments were frequent and we observe no
less than 12 instances where the new mediator resided in another place or residence than
the former.
The map in figure 3 shows the seven districts and the location of mediators. If a
mediator changed residency, or if a new mediator was appointed at a location different
from the previous mediator, this is indicated in the map with the first year of the new
mediator’s residency.
11
There were two liberal parties in Sweden at the time. The background information on the mediators reported in this
section has been drawn from biographical encyclopedias.
11
FIGURE 3. MAP OF THE MEDIATORS DISTRICTS AND THE LOCATION OF THE MEDIATOR’S RESIDENCY.
12
4. Swedish statistics on labor conflicts 1907-1927
Systematic and continuous collection of statistics on work stoppages in Sweden began in
1903.12 The gathering of data was initially based on information in daily journals and
trade journals (”Arbetsstatistik. E, Arbetsinställelser i Sverige”, 1909, p. 9–10). If a
conflict was encountered in a journal, questionnaires were sent out to the involved
parties. The response rate was high; in the period 1903-1923 responses were gathered
from both employer and worker representatives in almost 60 percent of all work
stoppages (Mikkelsen, 1992, p. 439). Local agents of the Ministry of Commerce
(Kommerskollegiums lokalombud) and, from 1907, the state mediators supplied
complementing information. Other sources occasionally used were annual reports from
the trade union confederations and employers’ organizations, as well as various price lists
and collective agreements. In contrast to some other countries, the Swedish statistics on
work stoppages had no limitations with regard to industry, number of involved workers
or duration (Mikkelsen, 1992, p. 438). In principle, the statistics should include all
conflicts – small and large.13
The gathering of information through questionnaires served a twofold purpose:
(1) to establish whether a conflict actually had resulted in a work stoppages, which was
what the statistics aimed to cover, and (2) to uncover the causes, characteristics and
outcomes of the conflict.14 Cases where the parties have supplied contradictory
information on whether a conflict-related work stoppage actually had occurred were
included in the statistics, but with notes about how the parties have described the events.
Until 1927, extensive information was included in the published reports for each
12
The first report was published in 1909, covered the years 1903-1907, but also included a retrospective view of work
stoppages in the period 1859-1902 and the general political strike of 1902 (den politiska storstrejken). (”Arbetsstatistik. E,
Arbetsinställelser i Sverige”, 1909)
13
In practice, there are of course possible gaps. It was, for example, recognized that conflicts concerning woodsmen in the
North may have been underreported (”Arbetsstatistik. E, Arbetsinställelser i Sverige”, 1909, p. 12).
14
More specifically, the statistics intended to include ”arbetsnedläggelse företagen af arbetsgifvare eller arbetare i syfte att
genomdrifva vissa fordringar rörande arbetsvillkoren” (”Arbetsstatistik. E, Arbetsinställelser i Sverige”, 1909, p. 11).
13
individual work stoppages, namely: the beginning and end of a stoppage (dates), nature
(strike or lockout), involved occupation(s), location, reason for conflict, number of
directly involved employers and workers, whether workers were organized, the outcome
of the conflict, the source of information and additional notes.
In this paper we use official statistics on work stoppages for the period 1907 to
1927. The beginning of our period of investigation coincides with the beginning of state
mediation. The period ends when the official statistics no longer includes information on
individual conflicts.
We have extracted, digitized and geo-coded each recorded work stoppage in the
period. We exclude work stoppages were information is missing in any of the relevant
variables used in the analyses (most often geographical location). This restriction leaves
us with 4,752 work stoppages. In figure 4 the number of strikes and their geocoded
locations are featured in a map.
Based on information on the result of a conflict, we have created a dummy
indicating whether a conflict ended in a compromise (1) or not (0). In about 70 percent of
the cases we could rely entirely on the information given in the published report since it
included the word kompromiss. In the remaining cases, we have based coding on a
comparison between the original demands put forward by the initiator of the conflict and
the stated result. For example, when saw mill workers in Luleå in 1917 received a 10
percent wage increase after having demanded a 20 percent increase we have classified it a
compromise.
14
FIGURE 4 WORK STOPPAGES IN SWEDEN 1907-1927
On average for the whole period, 41 percent of the work stoppages end in a
compromise. As seen in figure 5, there is a positive long-term trend of compromise
outcomes in strikes, similar to United States in the same period (Geraghty & Wiseman,
2011, p. 521), but with a clear difference: the level of compromises, both in the beginning
and end of the period, was considerably higher in Sweden (in most years by 10-20
percentage points). This adds to the evidence suggesting that Sweden was well on its way
15
in the transition to a state of the world where conflicts can be described as pure HawkDove games. Not all countries developed in this direction. In Canada, the share of
compromise outcomes fell from over 40 percent in the period 1901-1914 to about 23
percent in the period 1920 to 1934 (Huberman & Young, 2002, p. 339).
The depression of 1920-22 stands out in the figure. The downturn is associated
with the end of the First World War and deflationary pressure and has been described as
one of the larger crisis in Swedish economic history (Schön, 2010). GDP fell an
enormous 5 percent by 1921 with exports, investment and industrial production being the
components most affected. In 1921 the economic downturn was accompanied by a
tougher situation on the labor market as we see a marked drop in the share of
compromises. However, as the 1920s progressed and the economy was brought back on
track, the previous higher share of compromises were restored. In 1927, about half of the
work stoppages ended in a compromise outcome.
0.6
0.5
0.4
0.3
0.2
0.1
0.0
1903
1907
1911
1915
1919
1923
1927
FIGURE 5. SHARE OF COMPROMISE IN CONFLICT OUTCOMES
The most common cause of work stoppages was initiated by demands of wage increases.
There was a range of other conflict causes, both none of them appeared with the same
relative frequency as wage demands. In table 1, all recorded conflicts are summarized by
cause. The first column of the table shows the full period, while the next two tables
separate the period before and after the crisis of the early 1920s. It is visible that the share
16
of strikes for wage increases were larger during the inflationary period up to 1920 and
that the share of strikes against wage decreases became relatively more frequent after
1920. Actually, the share of strikes against wage decreases became more common during
the 1920s (from 11 % of all conflicts 1907-19 to 24% 1920-27). Simultaneously, the
share of conflicts relating to demands for wage increases dropped from 50 to 40 percent.
Also, the share of conflicts concerning organizational issues of the firms increased from
11 to 15 % after 1920. However, conflicts that explicitly concerned over workers’ right to
organize made up just 1 percent of all conflicts throughout the period.
1907-1927
1907-1919
1920-1927
N
%
N
%
N
%
For wage increase
2399
50
1605
58
794
40
Against wage decrease
544
11
79
3
465
24
Right to organize
33
1
18
1
15
1
For collective agreement
344
7
218
8
126
6
Against layoffs
293
6
158
6
135
7
Working hours
121
3
74
3
47
2
Personal issues
123
3
83
3
40
2
Organizational issues
582
12
293
11
289
15
Other or multiple causes
313
7
258
9
55
3
TABLE 1. CONFLICTS BY CAUSE (N AND SHARES IN PERCENT) AND SUB-PERIOD
Source: Authors’ calculation based on Statistics Sweden. Arbetsstatistik. E, Arbetsinställelser i Sverige.
5. Empirical strategy and results
In this section we analyse the importance of mediation on the probability of compromise
outcomes in work stoppages. Our analysis proceeds in the following steps. We begin in
section 5.1 by studying the relationship between compromise outcome and control
variables, such as duration, size and cause of work stoppage, without including
mediation. In section 5.2 we include mediation in the equations, first directly and
thereafter using geographical distance between the work stoppage and the location of the
mediator as an instrument. In section 5.3 we conduct a number of robustness checks,
17
including clustering of standard errors on parish level, controlling for the administrative
status of locations and comparing the outcomes of the first years of mediation with the
outcomes of work stoppages during the years before the Mediation Act.
5. 1. The nature of conflicts and compromise outcomes
In table 2 we present the general picture of compromise outcomes and their correlates in
our 4752 work stoppages 1907-27. The regression to be estimated has the following
function:
𝐶𝑜𝑚𝑝𝑟𝑜𝑚𝑖𝑠𝑒𝑖 = 𝑓(𝑑𝑢𝑟𝑎𝑡𝑖𝑜𝑛𝑖 , 𝑠𝑖𝑧𝑒𝑖 , 𝑐𝑎𝑢𝑠𝑒𝑖 , 𝑜𝑟𝑔𝑎𝑛𝑖𝑧𝑎𝑡𝑖𝑜𝑛𝑖 )
where the subset i refers to each stoppage in our sample. The dependent variable is
dummy taking on the value of 1 if the conflict ended in a compromise, duration measures
number of days in conflict, size measures the number of workers involved in strike or
lockout and organization is a dummy taking on the value 1 if both sides of the conflict
were organised (i.e. unionised or belonged to workers association).
In accordance with the hawk-dove model presented above, we see duration and size as
measures of conflict costs ( in figure 1), which we expect to be positively associated
with compromise outcome.15 The cause of the conflict may influence the likelihood of
compromise outcome in either direction. Generally, we expect struggles over rewards
that are divisible, such as workers’ demands for a wage increase or conflicts that involve
many issues, to be associated with compromise outcome. As noted by Geraghty &
Wiseman (2011, p. 522) there may also be particularly strong aversion towards
compromising in certain matters, such as workers’ aversion against wage cuts or firms’
unwillingness to accept restrictions on their managerial prerogatives. Thus, the reward, α,
may be cause-specific.
15
In a war-of-attrition model, by contrast, the conflict duration would be negatively associated with settlement, which in
turn would be won or lost.
18
In addition to theoretically motivated variables, we control for time, geography and
industry specific factors by including dummies for years, industry codes (following SNIcode system, dividing the stoppages into 14 main industries) and county or district level.
Since reaching a compromise outcome is a binary choice variable we run regressions
with as probit models and as OLS alternatively. There are no qualitative differences
between the models estimated using probit or OLS, suggesting that the correlates of
compromises can be reasonably well estimated using OLS. For presentation purposes we
include one probit specification in column 1, but focus on showing alternative
specifications controlling for time, county and industry in column 2-5. OLS was chosen
as an alternative since it has been shown that the probit estimator may give unreliable
results (Mood, 2010). Yet, alternative specifications using probit do not change the
results.
19
VARIABLES
ln(duration)
striking workers
lockout workers
both organized
wage decrease
right to organize
collective
agreement
lay offs
working hours
personal
organization
multiple / other
Constant
Observations
R-squared
Year FE
County FE
Industry FE
(1)
Probit
(2)
OLS
(3)
OLS
(4)
OLS
(5)
OLS
0.159***
(0.0148)
0.000480***
(0.000144)
0.000853
(0.000609)
0.0914**
(0.0391)
-0.231***
(0.0607)
-1.113***
(0.267)
0.0590***
(0.00534)
5.17e-05***
(2.00e-05)
0.000265
(0.000220)
0.0393***
(0.0141)
-0.0872***
(0.0227)
-0.379***
(0.0832)
0.0566***
(0.00546)
5.10e-05**
(2.00e-05)
0.000206
(0.000255)
0.0419***
(0.0147)
-0.0380
(0.0273)
-0.353***
(0.0834)
0.0567***
(0.00550)
5.00e-05**
(2.01e-05)
0.000198
(0.000255)
0.0425***
(0.0149)
-0.0392
(0.0274)
-0.365***
(0.0838)
0.0568***
(0.00555)
5.12e-05**
(2.02e-05)
0.000149
(0.000256)
0.0402***
(0.0150)
-0.0530*
(0.0278)
-0.376***
(0.0839)
-0.555***
(0.0767)
-0.637***
(0.0837)
-0.315***
(0.120)
-0.825***
(0.134)
-0.727***
(0.0636)
0.180**
(0.0771)
-0.471***
(0.0478)
-0.207***
(0.0275)
-0.232***
(0.0294)
-0.118***
(0.0442)
-0.284***
(0.0440)
-0.259***
(0.0220)
0.0703**
(0.0285)
0.332***
(0.0173)
-0.210***
(0.0278)
-0.226***
(0.0297)
-0.111**
(0.0443)
-0.284***
(0.0441)
-0.250***
(0.0226)
0.0657**
(0.0288)
0.386***
(0.0332)
-0.214***
(0.0280)
-0.225***
(0.0298)
-0.111**
(0.0445)
-0.285***
(0.0442)
-0.250***
(0.0227)
0.0640**
(0.0289)
0.350***
(0.0391)
-0.216***
(0.0282)
-0.233***
(0.0298)
-0.111**
(0.0446)
-0.292***
(0.0444)
-0.252***
(0.0227)
0.0627**
(0.0291)
0.365***
(0.0428)
4,752
4,752
0.088
NO
NO
NO
4,752
0.097
YES
NO
NO
4,752
0.101
YES
YES
NO
4,752
0.105
YES
YES
YES
NO
NO
NO
TABLE 2. CORRELATES OF COMPROMISE OUTCOMES, 1907-27
Note: Standard errors are in parenthesis
*** p<0.01, ** p<0.05, * p<0.1
Table 2 shows that the nature of the stoppage, i.e. its cause, duration and size
largely determined whether a conflict ended in a compromise or not. Compromises were,
as expected in a hawk-dove game, positively associated with longer stoppages, larger
stoppages (measured as the number of workers on strike or the number of workers on
lockout) and whether both sides on the conflict were organized. These results are in line
with the descriptive evidence presented by (Mikkelsen, 1992) and suggest that
compromises were the likely outcomes when workers and employers were of similar
20
strength. If one party had the upper hand in the conflict, for example if only the workers
were organized in unions but the employer remained unorganized, conflicts were more
likely to end quicker and involve less workers.
In addition, the cause of the conflict was critical in determining the probability of
reaching a compromise. We have divided the causes of the work stoppages into the nine
categories that appeared in table 1. The reference category is wage increase, which was
the most common cause of conflict as previously mentioned. Apart from conflicts of
“multiple or other” sources, work stoppages that started as a quest for wage increase were
also the most likely to end in compromises, followed by the issues of wage decreases and
working hours. Conflicts about collective agreements had a medium likelihood of
resulting in a compromise, perhaps since collective agreements contain many different
aspects of the employment relationship that may be negotiated. Conflicts about personal
matters, against layoffs and organizational matters were less likely to end in compromise.
Conflicts that concerned one of the fundamental rules of the game – the right to organize
– were the least likely of all to end in a compromise.
These results are robust through a number of differing specifications (probit,
OLS, with yearly controls, industry controls and with county controls) and paints a
picture of compromises being more likely whenever the nature of the conflict was
negotiation on a continuous scale (wages, hours) than whenever the outcome was more
binary (right to organize of not, etc.).
5.2 Identifying the causal effect of mediation
In table 3, a dummy that equals 1 whenever a mediator was present at the conflict is
added to the baseline specification in equation 1. Referring to figure 1, the presence of
mediation would lower the cost of making the first move towards compromise (). The
estimated marginal effect of mediation is an increase in the probability of compromise by
about 17-18 percent in the probit model in column 1. The estimated coefficients in the
OLS models in column 2-5 are of a similar size. The effect is robust to adding year,
industry and county dummies. Thus, even if the probability that a conflict ended in a
21
compromise was largely determined by the nature of the conflict (its duration, size and
cause), inviting a third party mediator had an additional positive and significant effect.
However, correlation is not causation. A potential concern is that work stoppages
involving a mediator, exhibited some other unobservable characteristic that made them
more likely to reach a compromise. For example, the mediator was perhaps only invited
to participate in conflicts where the parties were quite close to reach a compromise
anyway. Since the mediators had no legal rights to force their services on anyone, the fact
that the mediator was allowed to mediate may in itself signal some kind of willingness to
reach a compromise between the parties.
Thus, in order understand whether mediators actually played a causal role in
conflict resolution, we need to look for some measure that is correlated with mediation
but uncorrelated with the source of conflict or other confounding factors that may
influence the likelihood of reaching a compromise. Here we take advantage of the
geographical demarcation of the mediation districts.
As mentioned in section 3, the mediators were responsible for one district each and
were paid a moderate sum for their work. Since Sweden is a vast country, it is not
improbable that a mediator with limited access to resources would allocate more of his
time to conflicts at a closer distance. Information access is also likely to travel slowly and
if the conflict occurred far from the mediator’s home, it may have taken longer time
before mediators were aware of it.
22
VARIABLES
mediation
ln(duration)
striking workers
lockout workers
both organized
wage decrease
right to organize
collective
agreement
lay offs
working hours
personal
organization
multiple / other
Constant
Observations
R-squared
Year FE
County FE
Industry FE
(1)
Probit
(2)
OLS
(3)
OLS
(4)
OLS
(5)
OLS
0.507***
(0.0495)
0.117***
(0.0155)
0.000228
(0.000147)
0.000378
(0.000632)
0.0705*
(0.0394)
-0.254***
(0.0613)
-1.127***
(0.268)
0.193***
(0.0176)
0.0419***
(0.00550)
3.24e-05
(1.98e-05)
9.42e-05
(0.000218)
0.0278**
(0.0140)
-0.0936***
(0.0224)
-0.377***
(0.0821)
0.189***
(0.0179)
0.0414***
(0.00558)
3.26e-05
(1.99e-05)
0.000129
(0.000252)
0.0274*
(0.0146)
-0.0407
(0.0270)
-0.355***
(0.0824)
0.188***
(0.0182)
0.0415***
(0.00564)
3.27e-05
(1.99e-05)
0.000121
(0.000253)
0.0285*
(0.0148)
-0.0418
(0.0271)
-0.368***
(0.0828)
0.187***
(0.0183)
0.0415***
(0.00569)
3.51e-05*
(2.00e-05)
7.50e-05
(0.000253)
0.0268*
(0.0149)
-0.0521*
(0.0275)
-0.374***
(0.0830)
-0.584***
(0.0770)
-0.633***
(0.0844)
-0.309**
(0.121)
-0.812***
(0.135)
-0.695***
(0.0639)
0.189**
(0.0779)
-0.437***
(0.0481)
-0.214***
(0.0271)
-0.227***
(0.0290)
-0.115***
(0.0436)
-0.275***
(0.0435)
-0.245***
(0.0218)
0.0710**
(0.0282)
0.342***
(0.0171)
-0.217***
(0.0275)
-0.216***
(0.0294)
-0.109**
(0.0438)
-0.271***
(0.0436)
-0.231***
(0.0224)
0.0640**
(0.0285)
0.397***
(0.0328)
-0.218***
(0.0277)
-0.215***
(0.0295)
-0.109**
(0.0440)
-0.272***
(0.0437)
-0.230***
(0.0225)
0.0623**
(0.0286)
0.357***
(0.0386)
-0.217***
(0.0279)
-0.221***
(0.0295)
-0.106**
(0.0441)
-0.277***
(0.0439)
-0.232***
(0.0226)
0.0637**
(0.0288)
0.367***
(0.0423)
4,752
4,752
0.111
NO
NO
NO
4,752
0.118
YES
NO
NO
4,752
0.121
YES
YES
NO
4,752
0.125
YES
YES
YES
NO
NO
NO
TABLE 3. MEDIATION CORRELATION WITH COMPROMISE
Note: Standard errors are in parenthesis
*** p<0.01, ** p<0.05, * p<0.1
23
We have calculated distances between each work stoppage and the district
mediator’s residency by geocoding all locations in our database16. From official sources,
we know about the mediator’s place of residency17 and we then calculate the straight line
distance from the place of stoppage to mediator’s residency. Admittedly, the straight line
distance does not take actual travelling routes and time into consideration. Yet, we still
think it yields a reasonable approximation of the actual travelling distance.
Figure 6 shows a boxplot over the distance between the place of the stoppage
and the mediator’s place of residence. As seen from the boxplot, the median distance is
lower for stoppages involving mediation. In addition, the relationship is clearly nonlinear, with mediation occurring to a much larger extent at short distances from the
mediator’s residency.18 Shorter distances probably meant that the mediator could reach
the conflict within one office day’s travel back and forth, and conflicts occurring at such
sport where thus probably more likely to be visited by a third party. At very long
distances, for example when exceeding 100 kilometres, there is not much discernible
difference. This seems intuitively right since longer distances involved a decision to
travel, potentially by train or coach, to seek out the parties. Once, the decision to travel by
train was taken, whether the distance was 100 or 200 km may have played less role. Thus
we may consider stoppages occurring closer to mediator’s residency as being more likely
to fall under the influence of mediation than stoppages further away with a non-linear
relationship between distance and probability of mediation.
16
http://www.findlatitudeandlongitude.com/batch-geocode/#.VzLxH4SLTmE
17
Meddelanden från K. Kommerskollegii Afdelning för Arbetsstatistik, årg. 1910, sid. 30; Sveriges befolkning 1910
18
The entire sample shows that occurring in 31 % of all the strikes if they took place at the resident of the mediator,
compared to the total average of mediation in 18 % of the strikes.
24
300
200
0
100
distance_km
1
-5
-15
-10
lndistance
0
5
0
0
1
FIGURE 6. BOXPLOT OVER DISTANCE BETWEEN CONFLICT LOCATION AND MEDIATOR RESIDENCY IN CONFLICTS WITHOUT
MEDIATION (=0) AND INVOLVING MEDIATION (=1). KILOMETRES (TOP PANEL) AND IN LOGARITHMS (BOTTOM).
A potential concern is of course that the location of the mediators could be correlated
with some unobservable factor that also affects compromises, for example if mediators
generally lived in cities, and strikes in cities have a larger chance of ending in
compromise. As seen in section 3, however, the appointment of mediator relied solely on
the person and his qualities, regardless of place of location. In addition, in several
instances the place of mediation changed as a new mediator was appointed. In order to
further test this assumption we will carry out some robustness exercises, controlling for
compromises with a city dummy and using a placebo instrument, in section 5.3.
In table 4 we use the logarithmic distance to the mediator’s residency as an
instrument for mediation. In order to save space, we only present the IV-reg results for
25
the model’s second stage.19 In models 1-3 we present the results of the second stage of
the regression, when mediation was instrumented with the log of distance to the residency
of a mediator. We add year, industry and district controls. We also try a dummy for
whether the work stoppage took place at the residency of the mediator as an instrument.
The result from these regressions is presented in models 4-6, controlling for year,
industry and district controls.
There is a significant negative correlation between the log of distance to the
mediator’s residency and the occurrence of mediation at a work stoppage. The F-statistic
of the first stage in all specifications is far above the 5 percent critical value as defined by
Stock and Yogo (2005) at 16.38. The instrumented coefficients of mediation are reported
in the first row in the table. Comparing IV-estimates to the baseline estimates in table 3, it
is evident that the instrumented effects become larger (point estimates between 0.32-0.35
compared to previously estimated 0.18-0.19). An estimated 30 percent increase in
compromise outcomes due to mediation shows significant impact in both economic and
statistical terms.
There are some possible reasons why instrumented effects are larger than the
baseline estimates using OLS. The first is that the mediators consciously looked up
conflicts with lesser prospects of finding compromises. If there is a negative bias in the
OLS-estimate of mediation, then the instrumented coefficients will yield a larger effect.
Secondly, the instrument might capture some of the beneficent effects on compromises
that are not solely transmitted through the act of mediation. For examples, mediators
might have visited the work place without actually mediating formally in the conflict, still
mediators presence might nudged parties into compromising mood and it is also possible
that the mediator could have helped in carrying information to the striking parties. Third,
there might have been an underreporting of whether mediation actually took place at the
work stoppage, especially in cases that were not clear-cut as the one described above.
Finally, there is the potential that mediators could have positive local spill-over effects on
compromises even in conflicts where they did not actively take part as mediators.
19
IV probit estimations yield similar results.
26
VARIABLES
mediation
ln(duration)
striking workers
lockout workers
both organized
wage decrease
right to organize
collective agreement
lay offs
working hours
personal
organization
multiple / other
Constant
Observations
R-squared
Cragg-Donald
Wald F-stat
(1st stage)
Year FE
County FE
Industry FE
(1)
IV
distance
(2)
IV
distance
(3)
IV
distance
(4)
IV same
location
(5)
IV same
location
(6)
IV same
location
0.330***
(0.128)
0.0301***
(0.0116)
1.90e-05
(2.34e-05)
7.08e-05
(0.000258)
0.0166
(0.0175)
-0.0427
(0.0272)
-0.356***
(0.0827)
-0.221***
(0.0279)
-0.209***
(0.0302)
-0.109**
(0.0440)
-0.262***
(0.0445)
-0.217***
(0.0258)
0.0626**
(0.0286)
0.405***
(0.0336)
0.478***
(0.182)
0.0180
(0.0158)
6.20e-06
(2.63e-05)
2.36e-06
(0.000268)
0.00694
(0.0203)
-0.0458*
(0.0278)
-0.373***
(0.0846)
-0.225***
(0.0286)
-0.198***
(0.0318)
-0.106**
(0.0449)
-0.252***
(0.0463)
-0.199***
(0.0299)
0.0598**
(0.0292)
0.368***
(0.0400)
0.485**
(0.193)
0.0172
(0.0167)
9.61e-06
(2.62e-05)
-4.22e-05
(0.000269)
0.00564
(0.0205)
-0.0508*
(0.0280)
-0.370***
(0.0847)
-0.220***
(0.0285)
-0.203***
(0.0324)
-0.0974**
(0.0453)
-0.255***
(0.0472)
-0.200***
(0.0309)
0.0653**
(0.0294)
0.371***
(0.0432)
0.324**
(0.134)
0.0306**
(0.0121)
1.95e-05
(2.37e-05)
7.31e-05
(0.000258)
0.0170
(0.0178)
-0.0427
(0.0272)
-0.356***
(0.0827)
-0.221***
(0.0279)
-0.209***
(0.0303)
-0.109**
(0.0439)
-0.262***
(0.0446)
-0.218***
(0.0262)
0.0627**
(0.0286)
0.404***
(0.0337)
0.474**
(0.211)
0.0183
(0.0180)
6.54e-06
(2.80e-05)
3.88e-06
(0.000272)
0.00721
(0.0218)
-0.0457
(0.0278)
-0.373***
(0.0845)
-0.225***
(0.0287)
-0.199***
(0.0323)
-0.106**
(0.0449)
-0.252***
(0.0469)
-0.200***
(0.0320)
0.0599**
(0.0292)
0.368***
(0.0402)
0.476**
(0.222)
0.0179
(0.0190)
1.04e-05
(2.79e-05)
-3.87e-05
(0.000272)
0.00629
(0.0219)
-0.0508*
(0.0280)
-0.370***
(0.0846)
-0.220***
(0.0285)
-0.203***
(0.0331)
-0.0977**
(0.0454)
-0.255***
(0.0479)
-0.201***
(0.0331)
0.0652**
(0.0293)
0.370***
(0.0432)
4,752
0.107
4,752
0.074
4,752
0.076
4,752
0.108
4,752
0.075
4,752
0.079
95.398
YES
NO
NO
49.06
YES
YES
NO
44.564
YES
YES
YES
36.35
YES
NO
NO
36.348
YES
YES
NO
33.23
YES
YES
YES
TABLE 4. IV ESTIMATES FOR MEDIATION ON COMPROMISE OUTCOMES
Note: Standard errors are in parenthesis
*** p<0.01, ** p<0.05, * p<0.1
5.3 Placebo-effects of mediation
A potential concern is that the geographical instrument of mediation is picking up some
unobservable factor that drives compromises and is spuriously correlated with the
mediator’s location. To try to address this issue, we construct a placebo sample of work
27
stoppages utilizing the fact that the collection of statistics of work stoppages in Sweden
began in 1903, thus four years before the institution of mediation was introduced. In this
placebo sample, we have geocoded all locations of work stoppages taking place between
1903 and 1907. We have also added a placebo-treatment of mediation by constructing
dummies measuring the log of distance to the mediators of 1907’s residency. If our
instrument is really picking up the causal effect of mediation, we would not expect to see
any significant correlation between the placebo-treatment and the compromise dummy
before the institution was actually put in place. The rationale for the placebo control is
thus to test that the instrument really captures the effect of mediation, rather than some
unobservable factor correlating with mediators location.
In table 5 we show the regressions of the “placebo distance” dummy and the work
stoppages 1903-1906. Similarly, we add a placebo dummy for whether the stoppage took
place at the location of a future mediator’s residency. All specifications include the same
variables as our baseline regression, including controls for year, industry and
geography.20 In column 1, the correlation between the distance to the mediator and the
compromise dummy is positive and insignificant for 1903-1906. Since the placebo
mediation covers the four closest proceeding years to the initiation of the mediator’s
office, be also add the impact of the location of the office for the following four years for
comparison (1907-1911) in column 2. As seen from the table the log distance coefficient
that me becomes negative and significant at 10 % level after 1907 . Thus, it seems that
the fact that the work stoppage took place at the same location as a mediator is picking up
some real effect that influences compromises after 1907. Similarly, the dummy variable
for whether the conflict took place at the mediator’s residency behaves in a similar
fashion (negative and insignificant for the placebo sample, positive and borderline
significant for the sample 1907-11).
Admittedly, these placebo checks are far from ideal, the sample before 1907 is
relatively small (716 work stoppages) and with only four years of conflicts and seven
potential placebo locations of future mediators, there is not much variation in the data.
20 However, before 1907 there are no instances reported for which both parties were organized, so we have to drop this
explanatory variable for the placebo sample.
28
Yet, we believe that the placebo tests give some indication that the geographical
relationships to compromise resolution are related to the introduction of the mediation
institution.
However, one might still worry that the fact that the majority of mediators resided in
cities might influence the results, at least if there are some unobservable compromisewillingness that is larger in cities than elsewhere that we are unable to capture in our
model. Yet, recall from the map in figure 1 that the mediators did change locations on
several occasions. In addition, there are many cities in our sample that were never were
not “treated” with the presence of a mediator. Controlling for whether the location of the
work stoppage was a city does neither influence the chance of reaching a compromise nor
change the size and significance of mediation. The results are displayed in table A2 in the
appendix. Similarly, one may worry that observation units are not independent over
space, if spatial autocorrelation may influence the results. We address this issue by
clustering the standard errors at various geographical levels, but this does not change any
of our obtained results. The results are found in table A3 in the appendix.21
21
We cluster at the level of 24 counties and 812 geocodes. However, clustering at county level is not optimal since the
number of clusters is insufficient to calculate robust covariance matrix, as shown by for example Cameron et al (2008).
29
VARIABLES
ln(distance)
(1)
1903-1906 (Placebo)
(2)
1907-1911
0.00130
(0.00509)
-0.00980*
(0.00573)
same location
ln(duration)
striking workers
lockout workers
wage decrease
right to organize
collective
agreement
lay offs
working hours
personal
organization
multiple / other
Constant
(3)
1903-1906 (Placebo)
(4)
1907-1911
0.137*
(0.0775)
0.0612***
(0.0138)
0.000361***
(0.000138)
-9.30e-05
(0.000246)
-0.181**
(0.0839)
-0.366***
(0.129)
0.0259**
(0.0118)
0.000186*
(9.54e-05)
0.00164***
(0.000595)
-0.257***
(0.0876)
-0.437***
(0.130)
0.0553***
(0.0143)
0.000382**
(0.000166)
7.79e-05
(0.000394)
-0.186**
(0.0867)
-0.339**
(0.139)
-0.0433
(0.0708)
0.0350***
(0.0115)
0.000236***
(8.43e-05)
0.000641**
(0.000307)
-0.248***
(0.0852)
-0.460***
(0.129)
-0.0710
(0.0790)
-0.200**
(0.0819)
-0.00469
(0.144)
-0.177**
(0.0800)
-0.266***
(0.0547)
0.0924*
(0.0486)
0.297***
(0.101)
-0.125**
(0.0634)
-0.234***
(0.0784)
-0.00639
(0.103)
-0.112
(0.122)
-0.225***
(0.0572)
0.0959
(0.0648)
0.185*
(0.110)
-0.0938
(0.0777)
-0.213***
(0.0789)
-0.0145
(0.144)
-0.193**
(0.0779)
-0.243***
(0.0531)
0.0802*
(0.0473)
0.303***
(0.0966)
-0.0956
(0.0610)
-0.235***
(0.0763)
-0.00529
(0.0992)
-0.135
(0.118)
-0.230***
(0.0562)
0.0907
(0.0631)
0.184*
(0.104)
716
0.151
YES
YES
YES
666
0.143
YES
YES
YES
760
0.157
YES
YES
YES
699
0.154
YES
YES
YES
Observations
R-squared
Year FE
County FE
Industry FE
TABLE 5. PLACEBO MEDIATION
Standard errors in parentheses. Note that we were not able to control for both parties organized
*** p<0.01, ** p<0.05, * p<0.1
30
7. Interacting mediation with causes
The previous section has established a causal link between mediation and compromise
outcomes in out dataset. But if mediation was so influential, how do we then explain the
relatively flat evolution the share of compromise outcomes during the 1920s
(documented in figure 3), despite increasing presence of mediators in work stoppages, as
documented in figure 5? Potentially, such an evolution could suggest that the effect of
mediation, everything else equal, was reduced as the years went by. Perhaps mediation
played the largest role when the institution was novel and somehow managed to move the
position of the conflicting parties more than after a decade or two? In order to test this,
we run the regression with interaction terms of mediation with year dummies. However,
there were no significant effects from the interacted coefficients, suggesting that the
effect of mediation did not change to any significant extent during our investigated
period.22
Instead, we think that the resolution to the puzzle can be found in the changing nature
of conflicts during this period, as documented in table 1. Thus, we hypothesize that the
crisis of 1920 temporarily changed the nature of conflicts into causes that were harder to
solve using mediation. To test this alternative hypothesis, we interact our dummy for
mediation with the nature of the causes (divided into the 9 groups specified in table 1)
and add the interaction to our baseline sample, controlling for time, industry and county
fixed effects. The resulting coefficients of the interaction term are found in figure 7.
While the coefficient of the mediation coefficient is still significant and remain
qualitatively the same (point estimate is 0.24, which is somewhat larger than the
estimated coefficient of 0.187 in column 7, table 3), the figure displays that the effects of
mediation are lower compared in conflict that arise from other reasons than demands for
higher wages (the omitted category). Especially, the effect of mediation was significantly
lower in conflicts concerning the “rules of the game” such as conflicts about the right to
organize, collective agreements and issues concerning the organization of the firm. In
22
A graph of the coefficients of time dummies interacted with mediation is found in the appendix, figure A1.
31
those conflicts, the point estimate of the interaction term is similar to the base-line
estimate of the mediation coefficient, suggesting that mediation does not play a very large
role in these conflicts. Thus, mediation seems to work best in those conflicts that adhere
to the setting of the hawk-dove game, i.e. conflicts about a certain prize to be divided. If
the nature of conflicts change towards conflicts about indivisible causes, mediation
appears more toothless. Similarly, mediation appears to work better in conflicts
concerning wage increases compared to conflicts against wage decreases.
mediation
mediation*wage decrease
mediation*right to organize
mediation*collective agreement
mediation*against layoffs
mediation*working hours
mediation*personal
mediation*organization
mediation*multiple/other
-.8
-.6
-.4
-.2
0
.2
FIGURE 7. INTERACTION BETWEEN MEDIATION AND CAUSE OF CONFLICT
Note: the coefficients were added to the base-line regression as specified in table 3, column 7.
7. Conclusions
In this paper we analyse the first twenty years of state-sponsored mediation in Sweden,
focusing on the impact of mediation on strike outcomes. The context may be described as
one with frequent conflicts, here defined as work stoppages, of long duration, often
between relatively well-organized parties (trade unions and employers’ organizations).
The Swedish mediators were personally appointed, enjoyed high levels of social prestige,
32
and were responsible for conflict prevention and resolution within geographical districts,
but had limited authority and access to economic resources. The mediators relied on the
parties’ willingness to negotiate and their remuneration was not related to the actual costs
of their mission.
Yet, we find that the involvement of a mediator was significantly associated with
a compromise outcome. The causal impact of mediation that we establish in this paper is
not obvious. Among researchers, there are diverging opinions about whether mediation,
and similar institutions, can make any difference. There is even evidence to suggest that
mediation can be counterproductive. When mediation was discussed early twentieth
century Sweden, many observers doubted that it would have any effect. This paper has
shown that the mediators in the Swedish setting actually made a difference; they
contributed to a transition from violent antagonism in the labor market, to an atmosphere
where negotiations became a natural way of solving conflicts. Although mediation
remained an important tool for conflict solution, the 1920s constituted a tougher
challenge since relatively more conflict stoppages concerned issues that were harder to
compromise by nature. This may explain why the share of compromises dropped in the
early 1920s despite increased presence of mediators in conflicts. Yet, the long-term trend
towards increasing compromise outcomes was restored in the mid 1920’s. In 1926, 50 %
of all work stoppages ended in some kind of compromise. This is an overlooked aspect
of the pre-history of the Swedish Model. When the labor market parties in 1938 signed a
General Agreement, it had not only been preceded by some years of lower conflict
frequency, but those conflicts that actually broke out ended remarkably often in some
kind of compromise.
The finding that mediators actually played a constructive role in solving labor
conflicts in Sweden but not necessarily in other settings, such as Spain, opens up for
further questions regarding the quality of governance and the supply of persons that could
undertake the delicate task of mediating labor conflicts. Another important question,
which we have not adressed in this paper, is whether mediatiors managed to prevent
conflicts. We encourage the collection of similar micro-level data sets on strikes and
33
mediation from other countries and time period in order to compare the relative strengths
of the estimated effects. This seems like a promising avenue for future research.
Acknowledgements
We thank Diego Cattolica, Maria Lundborg, Emelie Rohne and Scott Sutherland for
research assistance and Robert Larsson for help with geo-coordinates. The paper has
benefitted from comments at presentations at Gothenburg university, Lund university,
and at the XIV Nordic Labour History Conference in Reykjavik 2016. We thank Sjaak
van der Velden, Jordi Domenech, Erik Bengtsson, Thor Berger, Jason Lennard, Josef
Taalbi and Julius Probst
for useful comments on previous versions of the paper.
Financial support from Swedish Research Council (project number 2014-1491) is
gratefully acknowledged.
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Appendix
Id
Location
1
Lund
Years of
service
1914-1917
Name
Occupational title(s)
2
Växjö
1907
Andersson, Nils
city notary
Bergendahl, Klas Hugo
chief magistrate
3
Ask/Svalöv
1907-1913
Berger, Frans Justus
lieutenant-colonel
4
5
Stockholm
1908-1918
Cederborg, Allan
city notary/magistrate
Örebro
1910-1919
Djurklou, Nils Gustaf Otto
lawyer
6
Stockholm
7
Stockholm
1927-
Ekblom, Olle
secretary
1907
Frölander, Theodor
deputy managing director
8
Göteborg
1920
Hamberg, Karl Gustaf
magistrate
1921-
Hansén, David
wholesale dealer
1907-1920
Hellström, Paul
superintendent/secretary/professor
9
Gammelstad
10
Luleå/Stockholm
11
Jönköping
1919
Johansson, Carl Robert
school inspector
12
Östersund
1923-
Johansson, Johan Peter
member of parliament
13
Göteborg
1907-1919
Karlsson, Karl Gustaf
tradesman
14
Göteborg
Kjellman, Hilding
professor
15
Härsta/Sundsvall
Kvarnzelius, Svante Herman
16
Stockholm
1919
Lagercrantz, Claës Gustaf
sheet-metal workers/member of
parliament
insurance councillor
17
Stockholm
1924
Lagerström, Otto E
lawyer
18
Göteborg
1921-1926
Mellgren, Olof Erik August
law clerk
19
Mjölby
Petersson, Erik Gustaf Hjalmar
district judge
20
Södertälje
1925-1926
Petersson, Jakob
chief magistrate
21
Stockholm
1920-1923
Rabenius, Lars Per Teodor
former under-secretary of state
22
Karlstad
1907-1909
Schotte, Axel
former minister of state
23
Kalmar
1908-1918
Waldenström, Alfred
district judge
24
Lund
1918-
professor
25
Örebro
1920-
Wallengren, Mårten Johan
Sigfrid
Wijkman, Anders Victor
Benedict
19271907-1922
1920-
county accountant
TABLE A1. LIST OF ALL MEDIATORS AND THEIR DISTRICTS 1907-27
Source: Sveriges statskalender. (various years). Stockholm: Fritzes offentliga publikationer
37
VARIABLES
(1)
IV
distance
(2)
IV
distance
(3)
IV
distance
(4)
IV same
location
Medlade
0.320**
0.525**
0.523**
0.312**
0.531*
0.518*
(0.146)
(0.227)
(0.247)
(0.156)
(0.278)
(0.303)
ln(duration)
strikingworkers
lockoutworkers
both_organized
wage decrease
(5)
IV same
location
(6)
IV same
location
0.0309**
0.0139
0.0139
0.0316**
0.0135
0.0143
(0.0131)
(0.0195)
(0.0212)
(0.0139)
(0.0235)
(0.0257)
2.00e-05
1.46e-06
6.22e-06
2.08e-05
9.37e-07
6.58e-06
(2.47e-05)
(2.95e-05)
(2.97e-05)
(2.53e-05)
(3.31e-05)
(3.33e-05)
7.56e-05
-2.17e-05
-6.07e-05
7.90e-05
-2.41e-05
-5.90e-05
(0.000260)
(0.000278)
(0.000280)
(0.000261)
(0.000287)
(0.000289)
0.0171
0.00415
0.00352
0.0176
0.00376
0.00380
(0.0179)
(0.0221)
(0.0226)
(0.0183)
(0.0249)
(0.0255)
-0.0495*
-0.0429
-0.0453
-0.0495*
-0.0429
-0.0453
(0.0271)
(0.0280)
(0.0284)
(0.0271)
(0.0281)
(0.0285)
-0.356***
-0.376***
-0.371***
-0.355***
-0.376***
-0.371***
(0.0828)
(0.0856)
(0.0853)
(0.0827)
(0.0858)
(0.0852)
-0.221***
-0.225***
-0.220***
-0.221***
-0.225***
-0.220***
(0.0279)
(0.0288)
(0.0287)
(0.0279)
(0.0290)
(0.0287)
lay offs
-0.209***
-0.196***
-0.201***
-0.209***
-0.196***
-0.201***
(0.0304)
(0.0327)
(0.0337)
(0.0305)
(0.0339)
(0.0353)
working hours
-0.108**
-0.108**
-0.0977**
-0.108**
-0.108**
-0.0978**
(0.0440)
(0.0453)
(0.0456)
(0.0440)
(0.0454)
(0.0457)
-0.262***
-0.249***
-0.252***
-0.263***
-0.249***
-0.252***
(0.0448)
(0.0476)
(0.0488)
(0.0449)
(0.0489)
(0.0505)
organization
-0.218***
-0.194***
-0.196***
-0.219***
-0.194***
-0.197***
(0.0268)
(0.0333)
(0.0351)
(0.0273)
(0.0374)
(0.0397)
multiple / other
0.0624**
0.0604**
0.0661**
0.0624**
0.0604**
0.0660**
right to organize
collective
agreement
Personal
(0.0286)
(0.0295)
(0.0297)
(0.0285)
(0.0295)
(0.0297)
city1920
0.00290
-0.0112
-0.00951
0.00335
-0.0115
-0.00924
(0.0162)
(0.0201)
(0.0229)
(0.0165)
(0.0221)
(0.0256)
Constant
0.402***
0.378***
0.378***
0.401***
0.379***
0.377***
(0.0365)
(0.0455)
(0.0472)
(0.0368)
(0.0474)
(0.0483)
Observations
4,752
4,752
4,752
4,752
4,752
4,752
R-squared
0.108
0.057
0.062
0.109
0.055
0.064
Year FE
YES
YES
YES
YES
YES
YES
County FE
NO
YES
YES
NO
YES
YES
Industry FE
NO
NO
YES
NO
NO
YES
TABLE A2 CONTROLLING FOR CITY EFFECTS
Note: Standard errors are in parenthesis
*** p<0.01, ** p<0.05, * p<0.1
38
VARIABLES
Mediation
ln(duration)
striking workers
lockout workers
both organized
wage decrease
right to organize
collective
agreement
lay offs
working hours
Personal
organization
multiple / other
Constant
Observations
R-squared
Year FE
County FE
Industry FE
(1)
IV distance
(2)
IV distance
(3)
IV distance
(4)
IV distance
(5)
IV distance
(6)
IV distance
0.324
(0.221)
0.0313*
(0.0174)
1.78e-05
(2.04e-05)
6.02e-05
(0.000213)
0.0190
(0.0195)
-0.0406
(0.0264)
-0.353***
(0.0794)
0.472**
(0.222)
0.0192
(0.0188)
4.91e-06
(2.28e-05)
-8.04e-06
(0.000218)
0.00898
(0.0213)
-0.0437
(0.0271)
-0.373***
(0.0853)
0.477**
(0.228)
0.0185
(0.0193)
9.18e-06
(2.18e-05)
-5.65e-05
(0.000224)
0.00758
(0.0211)
-0.0491*
(0.0272)
-0.370***
(0.0861)
0.330*
(0.184)
0.0301*
(0.0164)
1.90e-05
(1.82e-05)
7.08e-05
(0.000137)
0.0166
(0.0205)
-0.0427
(0.0287)
-0.356***
(0.0674)
0.478**
(0.236)
0.0180
(0.0214)
6.20e-06
(2.08e-05)
2.36e-06
(0.000151)
0.00694
(0.0244)
-0.0458
(0.0310)
-0.373***
(0.0755)
0.485**
(0.242)
0.0172
(0.0219)
9.61e-06
(2.12e-05)
-4.22e-05
(0.000149)
0.00564
(0.0237)
-0.0508
(0.0330)
-0.370***
(0.0758)
-0.218***
(0.0255)
-0.209***
(0.0294)
-0.109**
(0.0425)
-0.261***
(0.0337)
-0.218***
(0.0384)
0.0654**
(0.0309)
0.403***
(0.0447)
-0.221***
(0.0257)
-0.198***
(0.0315)
-0.107**
(0.0441)
-0.252***
(0.0360)
-0.200***
(0.0353)
0.0628**
(0.0314)
0.367***
(0.0511)
-0.216***
(0.0255)
-0.203***
(0.0324)
-0.0963**
(0.0443)
-0.254***
(0.0364)
-0.201***
(0.0370)
0.0688**
(0.0300)
0.368***
(0.0535)
-0.221***
(0.0196)
-0.209***
(0.0312)
-0.109***
(0.0313)
-0.262***
(0.0417)
-0.217***
(0.0314)
0.0626*
(0.0320)
0.405***
(0.0382)
-0.225***
(0.0187)
-0.198***
(0.0314)
-0.106***
(0.0316)
-0.252***
(0.0394)
-0.199***
(0.0342)
0.0598*
(0.0335)
0.368***
(0.0375)
-0.220***
(0.0201)
-0.203***
(0.0338)
-0.0974***
(0.0295)
-0.255***
(0.0401)
-0.200***
(0.0362)
0.0653**
(0.0332)
0.371***
(0.0336)
4,714
0.108
YES
NO
NO
4,714
0.075
YES
YES
NO
4,714
0.078
YES
YES
YES
4,752
0.107
YES
NO
NO
4,752
0.074
YES
YES
NO
4,752
0.076
YES
YES
YES
TABLE A3. CLUSTERING THE STANDARD ERRORS GEOGRAPHICALLY
Robust standard errors in parentheses. Models 1-3 cluster on geocode (812 clusters), models 4-6
cluster on county level (24 clusters)
*** p<0.01, ** p<0.05, * p<0.1
39
mediated_year==1907
mediated_year==1908
mediated_year==1909
mediated_year==1911
mediated_year==1912
mediated_year==1913
mediated_year==1914
mediated_year==1915
mediated_year==1916
mediated_year==1917
mediated_year==1918
mediated_year==1919
mediated_year==1920
mediated_year==1921
mediated_year==1922
mediated_year==1923
mediated_year==1924
mediated_year==1925
mediated_year==1926
mediated_year==1927
-1
-.5
0
.5
FIGURE A1. INTERACTED COEFFICIENTS OF MEDIATION WITH TIME DUMMIES
40
1