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| Author: | Roberts, M.A. Staehr, K. Tranaes, T. |
| Title: | Two-stage bargaining with coverage extension in a dual labour market |
| Journal: | European Economic Review
2000 : JAN, VOL. 44:1, p. 181-200 |
| Index terms: | Bargaining Pay Labour markets Centralisation Trade unions Models |
| Freeterms: | Minimum wages |
| Language: | eng |
| Abstract: | This paper studies coverage extension in a simple general equilibrium model with a dual labour market. The union sector is characterized by two-stage bargaining whereas the firms set wages in the non-union sector. In this model firms and unions of the union sector have a commonality of interest in extending coverage of a minimum wage to the non-union sector. Furthermore, the union sector does not seek to increase the non-union wage to a level above the market-clearing wage. In fact, it is optimal for the union sector to impose a market-clearing wage on the non-union sector. Finally, coverage extension increases welfare in this model. |
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