€¦  · Web viewFrom conflict to compromise. The importance of mediation in Swedish work stoppages 1907-1927. Kerstin Enflo* Tobias Karlsson** Paper prepared for the Economic History

From conflict to compromiseThe 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; N34Key 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

American strikes in the period 1880-1945, Geraghty and Wiseman (2011), maintain that 1English 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

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

frequent and long conflicts. In these days, Sweden may actually have been the most

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

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.

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

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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

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

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

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.

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

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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 state-

sponsored 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

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

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.

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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

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

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 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

190719081909191019111912191319141915191619171918191919201921192219231924192519261927

0

0.1

0.2

0.3

0.4

0.5

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 2500-

3000 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.

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

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,

12

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

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

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

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 Hawk-

Dove 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.

1903

1905

1907

1909

1911

1913

1915

1917

1919

1921

1923

1925

1927

0.0

0.1

0.2

0.3

0.4

0.5

0.6

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 ¿

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 SNI-

code 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

(1) (2) (3) (4) (5)VARIABLES Probit OLS OLS OLS OLS

ln(duration) 0.159*** 0.0590*** 0.0566*** 0.0567*** 0.0568***(0.0148) (0.00534) (0.00546) (0.00550) (0.00555)

striking workers 0.000480*** 5.17e-05*** 5.10e-05** 5.00e-05** 5.12e-05**(0.000144) (2.00e-05) (2.00e-05) (2.01e-05) (2.02e-05)

lockout workers 0.000853 0.000265 0.000206 0.000198 0.000149(0.000609) (0.000220) (0.000255) (0.000255) (0.000256)

both organized 0.0914** 0.0393*** 0.0419*** 0.0425*** 0.0402***(0.0391) (0.0141) (0.0147) (0.0149) (0.0150)

wage decrease -0.231*** -0.0872*** -0.0380 -0.0392 -0.0530*(0.0607) (0.0227) (0.0273) (0.0274) (0.0278)

right to organize -1.113*** -0.379*** -0.353*** -0.365*** -0.376***(0.267) (0.0832) (0.0834) (0.0838) (0.0839)

collective agreement -0.555*** -0.207*** -0.210*** -0.214*** -0.216***

(0.0767) (0.0275) (0.0278) (0.0280) (0.0282)lay offs -0.637*** -0.232*** -0.226*** -0.225*** -0.233***

(0.0837) (0.0294) (0.0297) (0.0298) (0.0298)working hours -0.315*** -0.118*** -0.111** -0.111** -0.111**

(0.120) (0.0442) (0.0443) (0.0445) (0.0446)personal -0.825*** -0.284*** -0.284*** -0.285*** -0.292***

(0.134) (0.0440) (0.0441) (0.0442) (0.0444)organization -0.727*** -0.259*** -0.250*** -0.250*** -0.252***

(0.0636) (0.0220) (0.0226) (0.0227) (0.0227)multiple / other 0.180** 0.0703** 0.0657** 0.0640** 0.0627**

(0.0771) (0.0285) (0.0288) (0.0289) (0.0291)Constant -0.471*** 0.332*** 0.386*** 0.350*** 0.365***

(0.0478) (0.0173) (0.0332) (0.0391) (0.0428)

Observations 4,752 4,752 4,752 4,752 4,752R-squared 0.088 0.097 0.101 0.105Year FE NO NO YES YES YESCounty FE NO NO NO YES YESIndustry FE NO NO NO NO YES

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

strength. If one party had the upper hand in the conflict, for example if only the workers

20

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

(1) (2) (3) (4) (5)VARIABLES Probit OLS OLS OLS OLS

mediation 0.507*** 0.193*** 0.189*** 0.188*** 0.187***(0.0495) (0.0176) (0.0179) (0.0182) (0.0183)

ln(duration) 0.117*** 0.0419*** 0.0414*** 0.0415*** 0.0415***(0.0155) (0.00550) (0.00558) (0.00564) (0.00569)

striking workers 0.000228 3.24e-05 3.26e-05 3.27e-05 3.51e-05*(0.000147) (1.98e-05) (1.99e-05) (1.99e-05) (2.00e-05)

lockout workers 0.000378 9.42e-05 0.000129 0.000121 7.50e-05(0.000632) (0.000218) (0.000252) (0.000253) (0.000253)

both organized 0.0705* 0.0278** 0.0274* 0.0285* 0.0268*(0.0394) (0.0140) (0.0146) (0.0148) (0.0149)

wage decrease -0.254*** -0.0936*** -0.0407 -0.0418 -0.0521*(0.0613) (0.0224) (0.0270) (0.0271) (0.0275)

right to organize -1.127*** -0.377*** -0.355*** -0.368*** -0.374***(0.268) (0.0821) (0.0824) (0.0828) (0.0830)

collective agreement -0.584*** -0.214*** -0.217*** -0.218*** -0.217***

(0.0770) (0.0271) (0.0275) (0.0277) (0.0279)lay offs -0.633*** -0.227*** -0.216*** -0.215*** -0.221***

(0.0844) (0.0290) (0.0294) (0.0295) (0.0295)working hours -0.309** -0.115*** -0.109** -0.109** -0.106**

(0.121) (0.0436) (0.0438) (0.0440) (0.0441)personal -0.812*** -0.275*** -0.271*** -0.272*** -0.277***

(0.135) (0.0435) (0.0436) (0.0437) (0.0439)organization -0.695*** -0.245*** -0.231*** -0.230*** -0.232***

(0.0639) (0.0218) (0.0224) (0.0225) (0.0226)multiple / other 0.189** 0.0710** 0.0640** 0.0623** 0.0637**

(0.0779) (0.0282) (0.0285) (0.0286) (0.0288)Constant -0.437*** 0.342*** 0.397*** 0.357*** 0.367***

(0.0481) (0.0171) (0.0328) (0.0386) (0.0423)

Observations 4,752 4,752 4,752 4,752 4,752R-squared 0.111 0.118 0.121 0.125Year FE NO NO YES YES YESCounty FE NO NO NO YES YESIndustry FE NO NO NO NO YES

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 non-

linear, 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

010

020

030

0di

stan

ce_k

m

0 1

-15

-10

-50

5ln

dist

ance

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

(1) (2) (3) (4) (5) (6)

VARIABLESIV

distanceIV

distanceIV

distanceIV same location

IV same location

IV same location

mediation 0.330*** 0.478*** 0.485** 0.324** 0.474** 0.476**(0.128) (0.182) (0.193) (0.134) (0.211) (0.222)

ln(duration) 0.0301*** 0.0180 0.0172 0.0306** 0.0183 0.0179(0.0116) (0.0158) (0.0167) (0.0121) (0.0180) (0.0190)

striking workers 1.90e-05 6.20e-06 9.61e-06 1.95e-05 6.54e-06 1.04e-05(2.34e-05) (2.63e-05) (2.62e-05) (2.37e-05) (2.80e-05) (2.79e-05)

lockout workers 7.08e-05 2.36e-06 -4.22e-05 7.31e-05 3.88e-06 -3.87e-05(0.000258) (0.000268) (0.000269) (0.000258) (0.000272) (0.000272)

both organized 0.0166 0.00694 0.00564 0.0170 0.00721 0.00629(0.0175) (0.0203) (0.0205) (0.0178) (0.0218) (0.0219)

wage decrease -0.0427 -0.0458* -0.0508* -0.0427 -0.0457 -0.0508*(0.0272) (0.0278) (0.0280) (0.0272) (0.0278) (0.0280)

right to organize -0.356*** -0.373*** -0.370*** -0.356*** -0.373*** -0.370***(0.0827) (0.0846) (0.0847) (0.0827) (0.0845) (0.0846)

collective agreement -0.221*** -0.225*** -0.220*** -0.221*** -0.225*** -0.220***(0.0279) (0.0286) (0.0285) (0.0279) (0.0287) (0.0285)

lay offs -0.209*** -0.198*** -0.203*** -0.209*** -0.199*** -0.203***(0.0302) (0.0318) (0.0324) (0.0303) (0.0323) (0.0331)

working hours -0.109** -0.106** -0.0974** -0.109** -0.106** -0.0977**(0.0440) (0.0449) (0.0453) (0.0439) (0.0449) (0.0454)

personal -0.262*** -0.252*** -0.255*** -0.262*** -0.252*** -0.255***(0.0445) (0.0463) (0.0472) (0.0446) (0.0469) (0.0479)

organization -0.217*** -0.199*** -0.200*** -0.218*** -0.200*** -0.201***(0.0258) (0.0299) (0.0309) (0.0262) (0.0320) (0.0331)

multiple / other 0.0626** 0.0598** 0.0653** 0.0627** 0.0599** 0.0652**(0.0286) (0.0292) (0.0294) (0.0286) (0.0292) (0.0293)

Constant 0.405*** 0.368*** 0.371*** 0.404*** 0.368*** 0.370***(0.0336) (0.0400) (0.0432) (0.0337) (0.0402) (0.0432)

Observations 4,752 4,752 4,752 4,752 4,752 4,752R-squared 0.107 0.074 0.076 0.108 0.075 0.079Cragg-DonaldWald F-stat(1st stage) 95.398 49.06 44.564 36.35 36.348 33.23Year FE YES YES YES YES YES YESCounty FE NO YES YES NO YES YESIndustry FE NO NO YES NO NO 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

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

27

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.

Yet, we believe that the placebo tests give some indication that the geographical

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

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 compromise-

willingness 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

(1) (2) (3) (4)

VARIABLES 1903-1906 (Placebo) 1907-1911 1903-1906 (Placebo) 1907-1911

ln(distance) 0.00130 -0.00980*

(0.00509) (0.00573)

same location -0.0433 0.137*

(0.0708) (0.0775)

ln(duration) 0.0259** 0.0553*** 0.0350*** 0.0612***

(0.0118) (0.0143) (0.0115) (0.0138)

striking workers 0.000186* 0.000382** 0.000236*** 0.000361***

(9.54e-05) (0.000166) (8.43e-05) (0.000138)

lockout workers 0.00164*** 7.79e-05 0.000641** -9.30e-05

(0.000595) (0.000394) (0.000307) (0.000246)

wage decrease -0.257*** -0.186** -0.248*** -0.181**

(0.0876) (0.0867) (0.0852) (0.0839)

right to organize -0.437*** -0.339** -0.460*** -0.366***

(0.130) (0.139) (0.129) (0.129)collective agreement -0.0710 -0.125** -0.0938 -0.0956

(0.0790) (0.0634) (0.0777) (0.0610)

lay offs -0.200** -0.234*** -0.213*** -0.235***

(0.0819) (0.0784) (0.0789) (0.0763)

working hours -0.00469 -0.00639 -0.0145 -0.00529

(0.144) (0.103) (0.144) (0.0992)

personal -0.177** -0.112 -0.193** -0.135

(0.0800) (0.122) (0.0779) (0.118)

organization -0.266*** -0.225*** -0.243*** -0.230***

30

(0.0547) (0.0572) (0.0531) (0.0562)

multiple / other 0.0924* 0.0959 0.0802* 0.0907

(0.0486) (0.0648) (0.0473) (0.0631)

Constant 0.297*** 0.185* 0.303*** 0.184*

(0.101) (0.110) (0.0966) (0.104)

Observations 716 666 760 699

R-squared 0.151 0.143 0.157 0.154

Year FE YES YES YES YES

County FE YES YES YES YES

Industry FE YES YES YES YES

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

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

31

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

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.

22 A graph of the coefficients of time dummies interacted with mediation is found in the appendix, figure A1.

32

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,

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

33

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

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

34

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 Years of service

Name Occupational title(s)

1 Lund 1914-1917 Andersson, Nils city notary

2 Växjö 1907 Bergendahl, Klas Hugo chief magistrate

3 Ask/Svalöv 1907-1913 Berger, Frans Justus lieutenant-colonel

4 Stockholm 1908-1918 Cederborg, Allan city notary/magistrate

5 Örebro 1910-1919 Djurklou, Nils Gustaf Otto lawyer

6 Stockholm 1927- Ekblom, Olle secretary

7 Stockholm 1907 Frölander, Theodor deputy managing director

8 Göteborg 1920 Hamberg, Karl Gustaf magistrate

9 Gammelstad 1921- Hansén, David wholesale dealer

10 Luleå/Stockholm 1907-1920 Hellström, Paul superintendent/secretary/professor

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 1927- Kjellman, Hilding professor

15 Härsta/Sundsvall 1907-1922 Kvarnzelius, Svante Herman sheet-metal workers/member of parliament

16 Stockholm 1919 Lagercrantz, Claës Gustaf insurance councillor

17 Stockholm 1924 Lagerström, Otto E lawyer

18 Göteborg 1921-1926 Mellgren, Olof Erik August law clerk

19 Mjölby 1920- 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- Wallengren, Mårten Johan Sigfrid

professor

25 Örebro 1920- Wijkman, Anders Victor Benedict

county accountant

TABLE A1. LIST OF ALL MEDIATORS AND THEIR DISTRICTS 1907-27

Source: Sveriges statskalender. (various years). Stockholm: Fritzes offentliga publikationer

38

(1) (2) (3) (4) (5) (6)

VARIABLESIV

distanceIV

distanceIV

distanceIV same location

IV same location

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) 0.0309** 0.0139 0.0139 0.0316** 0.0135 0.0143(0.0131) (0.0195) (0.0212) (0.0139) (0.0235) (0.0257)

strikingworkers 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)

lockoutworkers 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)

both_organized 0.0171 0.00415 0.00352 0.0176 0.00376 0.00380(0.0179) (0.0221) (0.0226) (0.0183) (0.0249) (0.0255)

wage decrease -0.0429 -0.0453 -0.0495* -0.0429 -0.0453 -0.0495*(0.0271) (0.0280) (0.0284) (0.0271) (0.0281) (0.0285)

right to organize -0.356*** -0.376*** -0.371*** -0.355*** -0.376*** -0.371***(0.0828) (0.0856) (0.0853) (0.0827) (0.0858) (0.0852)

collective agreement -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)Personal -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**

(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 4,752R-squared 0.108 0.057 0.062 0.109 0.055 0.064Year FE YES YES YES YES YES YESCounty FE NO YES YES NO YES YESIndustry 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

39

(1) (2) (3) (4) (5) (6)VARIABLES IV distance IV distance IV distance IV distance IV distance IV distance

Mediation 0.324 0.472** 0.477** 0.330* 0.478** 0.485**(0.221) (0.222) (0.228) (0.184) (0.236) (0.242)

ln(duration) 0.0313* 0.0192 0.0185 0.0301* 0.0180 0.0172(0.0174) (0.0188) (0.0193) (0.0164) (0.0214) (0.0219)

striking workers 1.78e-05 4.91e-06 9.18e-06 1.90e-05 6.20e-06 9.61e-06(2.04e-05) (2.28e-05) (2.18e-05) (1.82e-05) (2.08e-05) (2.12e-05)

lockout workers 6.02e-05 -8.04e-06 -5.65e-05 7.08e-05 2.36e-06 -4.22e-05(0.000213) (0.000218) (0.000224) (0.000137) (0.000151) (0.000149)

both organized 0.0190 0.00898 0.00758 0.0166 0.00694 0.00564(0.0195) (0.0213) (0.0211) (0.0205) (0.0244) (0.0237)

wage decrease -0.0406 -0.0437 -0.0491* -0.0427 -0.0458 -0.0508(0.0264) (0.0271) (0.0272) (0.0287) (0.0310) (0.0330)

right to organize -0.353*** -0.373*** -0.370*** -0.356*** -0.373*** -0.370***(0.0794) (0.0853) (0.0861) (0.0674) (0.0755) (0.0758)

collective agreement -0.218*** -0.221*** -0.216*** -0.221*** -0.225*** -0.220***

(0.0255) (0.0257) (0.0255) (0.0196) (0.0187) (0.0201)lay offs -0.209*** -0.198*** -0.203*** -0.209*** -0.198*** -0.203***

(0.0294) (0.0315) (0.0324) (0.0312) (0.0314) (0.0338)working hours -0.109** -0.107** -0.0963** -0.109*** -0.106*** -0.0974***

(0.0425) (0.0441) (0.0443) (0.0313) (0.0316) (0.0295)Personal -0.261*** -0.252*** -0.254*** -0.262*** -0.252*** -0.255***

(0.0337) (0.0360) (0.0364) (0.0417) (0.0394) (0.0401)organization -0.218*** -0.200*** -0.201*** -0.217*** -0.199*** -0.200***

(0.0384) (0.0353) (0.0370) (0.0314) (0.0342) (0.0362)multiple / other 0.0654** 0.0628** 0.0688** 0.0626* 0.0598* 0.0653**

(0.0309) (0.0314) (0.0300) (0.0320) (0.0335) (0.0332)Constant 0.403*** 0.367*** 0.368*** 0.405*** 0.368*** 0.371***

(0.0447) (0.0511) (0.0535) (0.0382) (0.0375) (0.0336)

Observations 4,714 4,714 4,714 4,752 4,752 4,752R-squared 0.108 0.075 0.078 0.107 0.074 0.076Year FE YES YES YES YES YES YESCounty FE NO YES YES NO YES YESIndustry FE NO NO YES NO NO 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

40

mediated_year==1907mediated_year==1908mediated_year==1909mediated_year==1911mediated_year==1912mediated_year==1913mediated_year==1914mediated_year==1915mediated_year==1916mediated_year==1917mediated_year==1918mediated_year==1919mediated_year==1920mediated_year==1921mediated_year==1922mediated_year==1923mediated_year==1924mediated_year==1925mediated_year==1926mediated_year==1927

-1 -.5 0 .5 1

FIGURE A1. INTERACTED COEFFICIENTS OF MEDIATION WITH TIME DUMMIES

41