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

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.