Minimum Wages and Union Bargaining in a Dual Labour Market
The paper analyses the links between a binding minimum wage and union bargaining. A dual labour market model is developed where the first sector outcome is characterised by bargaining between unions and firms, while in the second sector firms have to pay a statutory minimum wage. It is shown that a minimum wage increase has negative employment effects only if the bargaining outcome is described by the Nash solution. However, this result does not hold if the Kalai-Smorodinsky solution is applied to model union bargaining. A higher minimum wage can then lead to more employment in the unionised sector and to a lower unemployment rate.
|Date of creation:||2007|
|Date of revision:|
|Contact details of provider:|| Postal: 01062 Dresden|
Phone: ++49 351 463 2196
Fax: ++49 351 463 7739
Web page: http://www.tu-dresden.de/wiwi/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pedro Portugal & Ana Rute Cardoso, 2006.
"Disentangling the Minimum Wage Puzzle: An Analysis of Worker Accessions and Separations,"
Journal of the European Economic Association,
MIT Press, vol. 4(5), pages 988-1013, 09.
- Portugal, Pedro & Cardoso, Ana Rute, 2002. "Disentangling the Minimum Wage Puzzle: An Analysis of Worker Accessions and Separations," IZA Discussion Papers 544, Institute for the Study of Labor (IZA).
- McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
- David Neumark & William Wascher, 2006.
"Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research,"
NBER Working Papers
12663, National Bureau of Economic Research, Inc.
- David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," Working Papers 060708, University of California-Irvine, Department of Economics, revised Jan 2007.
- Dubra, Juan, 2001.
"An asymmetric Kalai-Smorodinsky solution,"
Elsevier, vol. 73(2), pages 131-136, November.
- Masters, Adrian M, 1999. "Wage Posting in Two-Sided Search and the Minimum Wage," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(4), pages 809-26, November.
- Mark A. Roberts & Karsten Stæhr & Torben Tranæs, .
"Two-Stage Bargaining with Coverage Extension in a Dual Labour Market,"
EPRU Working Paper Series
97-28, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- Roberts, Mark A. & Staehr, Karsten & Tranaes, Torben, 2000. "Two-stage bargaining with coverage extension in a dual labour market," European Economic Review, Elsevier, vol. 44(1), pages 181-200, January.
- Mark A. Roberts & Karsten Stæhr & Torben Tranæs, 1997. "Two-Stage Bargaining with Coverage Extension in a Dual Labour Market," Discussion Papers 97-13, University of Copenhagen. Department of Economics.
- Rebitzer, James B. & Taylor, Lowell J., 1995.
"The consequences of minimum wage laws Some new theoretical ideas,"
Journal of Public Economics,
Elsevier, vol. 56(2), pages 245-255, February.
- James B. Rebitzer & Lowell J. Taylor, 1991. "The Consequences of Minimum Wage Laws: Some New Theoretical Ideas," NBER Working Papers 3877, National Bureau of Economic Research, Inc.
- Daniel Cardona & Fernando Sánchez-Losada, 2006. "Unions, qualification choice, and output," Oxford Economic Papers, Oxford University Press, vol. 58(1), pages 50-76, January.
- repec:att:wimass:9512 is not listed on IDEAS
- Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
- Cahuc, P. & Saint-Martin, A. & Zylberberg, A., 2001. "The consequences of the minimum wage when other wages are bargained over," European Economic Review, Elsevier, vol. 45(2), pages 337-352, February.
- John Kennan, 1995.
"The Elusive Effects of Minimum Wages,"
Journal of Economic Literature,
American Economic Association, vol. 33(4), pages 1950-1965, December.
- Christopher J. Flinn, 2006. "Minimum Wage Effects on Labor Market Outcomes under Search, Matching, and Endogenous Contact Rates," Econometrica, Econometric Society, vol. 74(4), pages 1013-1062, 07.
When requesting a correction, please mention this item's handle: RePEc:zbw:tuddps:1307. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.