Answer to Question #83604 in Economics of Enterprise for Shaendra

Question

Unions can affect the wage and employment of non-union sectors in various ways. Discuss the wages and employments for union sector and non-union sector with the following situations. a. Union wage rate is higher than an ordinary market equilibrium wage rate. And labours who fail to get a position in the union sector will move to non-union sector. b. Union wage rate is higher than an ordinary market equilibrium wage rate. And labours who fail to get a position in the union sector will stay on the union sector to find a job since union wage is higher than the rate of non-union sector. c. Union wage rate is higher than an ordinary market equilibrium wage rate. And labours who fail to get a position in the union sector will move to the non-union sector. The non-union sector has two groups. Group one is able to organize unions and threatens to organize unions if wages are not increased. Group Two is not able to organize unions.

Answer 1

a. Union wage rate is higher than an ordinary market equilibrium wage rate. And labours who fail to get a position in the union sector will move to non-union sector.

The wages for union sector will be higher than for non-union sector, but employment will decrease in the union sector and increase in the non-union sector.

b. Union wage rate is higher than an ordinary market equilibrium wage rate. And labours who fail to get a position in the union sector will stay on the union sector to find a job since union wage is higher than the rate of non-union sector.

The wages for union sector will decrease, but employment will be higher in the union sector than in the non-union sector.

c. Union wage rate is higher than an ordinary market equilibrium wage rate. And labours who fail to get a position in the union sector will move to the non-union sector. The non-union sector has two groups. Group one is able to organize unions and threatens to organize unions if wages are not increased. Group Two is not able to organize unions.

The wages for union sector will be higher than for non-union sector, the employment will increase in the union sector and decrease in the non-union sector.