Minimum Wages and Union Bargaining in a Dual Labour Market

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Dresden Discussion Paper Series in Economics ; No. 13/07

Classification and Topics

• Classification: Wirtschaft ; Wages, Compensation, and Labor Costs: General ; Bargaining Theory; Matching Theory ; Trade Unions: Objectives, Structure, and Effects
• Subject: Minimum wages ; union bargaining ; Nash approach ; Kalai-Smorodinsky solution ; Mindestlohn ; Beschäftigungseffekt ; Lohnverhandlungstheorie ; Nash-Gleichgewicht ; Mehr-Sektoren-Modell ; Gewerkschaftlicher Organisationsgrad ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dittrich, Marcus
• Event: Veröffentlichung
• (who): Technische Universität Dresden, Fakultät Wirtschaftswissenschaften
• (where): Dresden
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/22754
• Last update: 10.03.2025, 11:43 AM CET