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|
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- Rebitzer, James B. & Taylor, Lowell J., 1995.
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- Mark A. Roberts & Karsten Stæhr & Torben Tranæs, 1997.
"Two-Stage Bargaining with Coverage Extension in a Dual Labour Market,"
97-13, 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, "undated". "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.
- Kennan, J., 1995.
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9512, Wisconsin Madison - Social Systems.
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- Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
- David Neumark & William Wascher, 2006.
"Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research,"
060708, University of California-Irvine, Department of Economics, revised Jan 2007.
- 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.
- Daniel Cardona & Fernando Sánchez-Losada, 2006. "Unions, qualification choice, and output," Oxford Economic Papers, Oxford University Press, vol. 58(1), pages 50-76, January.
- 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.
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