From Conflict to Compromise: The importance of mediation in Swedish work stoppages 1907-1927

Institutions for prevention and resolution of labor market conflicts were introduced all over the world in the early twentieth century. In this paper we analyze the impact of mediation on compromise outcomes in Swedish labor market conflicts, using a dataset of geo-coded strikes and lockouts from 1907 to 1927. Causality is identified by using the distance from the mediator's residence to the conflict as an instrument. Despite their limited authority and access to economic resources, the presence of mediators 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 recognized each other and struggled over a prize that could be divided. The results suggest that mediation could have paved the way for a cooperative atmosphere in local labor markets. At the national level such an atmosphere was clearly manifested in the General Agreement in 1938 and with the rise of the Swedish Model.