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

Ana Paula Martins

International Journal of Social Economics, 2009, vol. 36, issue 5, 580-607

Abstract: 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.

Keywords: Trade unions; Pay policies; Pay bargaining; Labour market; Industrial relations (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijsepp:v:36:y:2009:i:5:p:580-607

DOI: 10.1108/03068290910954040

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