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Union duopoly with heterogeneous labor: the effect of minimum wage regulation

Listed author(s):
  • Ana Paula Martins

Purpose - The purpose of this paper is to analyse the labor market outcome when there are two unions in the industry, representing heterogeneous workers – substitutes or complements in production – and using wage strategies, in the presence of minimum wage regulation. Design/methodology/approach - Three strategic environments are considered: symmetric Bertrand-Nash duopoly, Stackelberg duopoly, and efficient cooperation between the two unions. Findings - Usually, minimum wage legislation (floor) would decrease employment; it is shown that in Stackelberg environment, minimum wage legislation may induce an increase in total employment. Wage-pushing strategies by a leader may also arise; and if workers are substitutes, entry deterrence strategies by the leader may be observed. Originality/value - This paper analyses the impact of minimum wages in duopoly scenarios in an extensive way.

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Article provided by Emerald Group Publishing in its journal International Journal of Social Economics.

Volume (Year): 36 (2009)
Issue (Month): 5 (April)
Pages: 580-607

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Handle: RePEc:eme:ijsepp:v:36:y:2009:i:5:p:580-607
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