2. In the retail trade industry, unionized workers earn 19.0% more than non-unionized workers do. As you learned in class, this does not necessarily mean that non-union workers who gained union membership would receive raises of (on average) 19%, nor does it mean that the existence of the union increased the wages of workers who were able to join the union by 19%. Define the "spillover" and "threat" effects. If the spillover effect were larger in magnitude than the threat effect, would the existence of unions raise or lower the earnings of non-union workers? Would the 19% difference between union and non-union wages overestimate or underestimate the value of belonging to a labor union? (Again, ignore other factors for this part.) Briefly explain how the "product market" effect may operate in this industry. If the product market effect were large, would that suggest that the 19% wage difference is an underestimate or an overestimate of the amount by which unions increase workers' wages? (Ignore other factors again here.)

2. In the retail trade industry, unionized workers earn 19.0% more than non-unionized workers do. As you learned in class, this does not necessarily mean that non-union workers who gained union membership would receive raises of (on average) 19%, nor does it mean that the existence of the union increased the wages of workers who were able to join the union by 19%. Define the "spillover" and "threat" effects. If the spillover effect were larger in magnitude than the threat effect, would the existence of unions raise or lower the earnings of non-union workers? Would the 19% difference between union and non-union wages overestimate or underestimate the value of belonging to a labor union? (Again, ignore other factors for this part.) Briefly explain how the "product market" effect may operate in this industry. If the product market effect were large, would that suggest that the 19% wage difference is an underestimate or an overestimate of the amount by which unions increase workers' wages? (Ignore other factors again here.)

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Unemployment

Section: Chapter Questions

Problem 8PA

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