Two-stage bargaining with coverage extension in a dual labour market
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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
Original language | English |
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Journal | European Economic Review |
Volume | 44 |
Issue number | 1 |
Pages (from-to) | 181-200 |
ISSN | 0014-2921 |
DOIs | |
Publication status | Published - 2000 |
ID: 149231