Question

In: Economics

What is the relationship between union wages and employment? What are some issues affecting labor supply...

What is the relationship between union wages and employment?

What are some issues affecting labor supply and utility maximization?

Solutions

Expert Solution

Answer.

Basically, Unions have a substantial impact on the compensation and work lives of both unionized and non-unionized workers.

Unions function as labor cartels, restricting the number of workers in a company or industry to drive up the remaining workers' wages. They also retard economic growth and delay recovery from recession. Over time, unions destroy jobs in the companies they organize and have the same effect on business investment as does a 33 percentage point corporate income tax increase.

The Key takeaways are,

  • Unions benefit their members but hurt consumers generally, and especially workers who are denied job opportunities.
  • Unions decrease the number of jobs available in the economy. The vast majority of manufacturing jobs lost over the past three decades have been among union members.
  • Congress should remember that union cartels retard economic growth and delay recovery when considering legislation that would force workers to join unions.

Some issues affecting labor supply and utility maximization are,

  • Substitution effect of a rise in wages
  • Income effect of a rise in wages
  • The number of qualified people
  • Difficulty of getting qualifications
  • The non-wage benefits of a job
  • The wages and conditions of other jobs
  • Demographic changes and immigration

Hope I have answered your question correctly. Keep studying. Have a nice day.


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