Union Strength, Collective Bargaining, and Strike Activity: Insights From Chile's 2017 Labor Reform

Abstract

We study the causal impact of Chile's 2017 labor reform—which banned the replacement of striking workers and restricted unilateral extension of collective benefits—on strike activity, wages, and employment. Using administrative data on all regulated collective negotiations from 2008 to 2024 in a difference‐in‐differences framework that exploits pre‐reform variation in union density, we find no increase in strike incidence and modest decreases in strike voting and actual stoppages among more unionized firms. Effects on wages are negligible; effects on employment are positive but display pre‐reform trends. The pattern is consistent with the joint cost model and with the institutional‐context literature.