In: Economics
Explain and illustrate the cross sector effects that may occur due to unions.
Ans- A union(either labor or worker's union) is an organisation in which the workers have a common interests that is confronted by the union.
The main work of these unions is to maintain and improve the conditions of the workers through increasing bargaining power with employers. The aim is to earn a good wage that is efficient for the worker. Also, they ensure their workers that they will reduce inequalities.
Some of the cross sector effects that may arise due to unions are mentioned below:-
1) Spillover effects- It means a decrease in wage which is from non union workers that results from supplanted union workers that were supplying their services in non-union labor markets.
2) Ultimatum effect- As we know that some of the effects that arise due to labour union increases the Bargaining power of the workers (as mentioned above) collectively. Due to ultimatum effect there will be an increase in nonunion wages that a nonunion employer offers as a response to the ultimatum.