Labor Economics
7th Edition
ISBN: 9780078021886
Author: George J Borjas
Publisher: McGraw-Hill Education
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Question
Chapter 10, Problem 3P
(a)
To determine
Impact of union dues on the decision to join the union.
(b)
To determine
Retirement benefits due to the presence of union.
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Figure demonstrates some of the trade-offs involved when deciding to join a union.a. Provide a graph that shows how the presence of union dues affects the decision to join a union. (Assume all workers pay a flat rate for dues.) Show on your graph how the presence of union dues may lead the worker to be less inclined to join the uni on.b. Suppose in addition to higher wages the union negotiates a 10 percent employer contribution to a defined contribution pension plan. Provide a graph that incorporates this retirement benefit into the decision of whether to join a union. Show on your graph how additional fringe benefits such as a retirement plan may cause the worker to be more inclined to join the union.
Suppose the union’s resistance curve is summarized by the following data. The union’s initial wage demand is $10 per hour. If a strike occurs, the wage demands change as follows:Length of Strike: Hourly Wage Demanded1 month $92 months 83 months 74 months 65 or more months 5Consider the following changes to the union resistance curve and state whether the proposed change makes a strike more likely to occur, and whether, if a strike occurs, it is a longer strike.a. The drop in the wage demand from $10 to $5 per hour occurs within the span of two months, as opposed to five months.b. The union is willing to moderate its wage demands further after the strike has lasted for six months. In particular, the wage demand keeps dropping to $4 in the sixth…
Consider two provinces that adopt different laws concerning labour unions.
The following graph shows the labour market in a province in the West. Initially, the market-clearing wage is $5 per hour. Suppose that the legislature in this western province passes laws that make it easy for workers to join a union. Through collective bargaining, the union negotiates a wage of $7 per hour.
Use the black point (plus symbol) to show how many union workers will be employed at the $7 wage. (Hint: Be sure to place the point on the appropriate curve.)
Chapter 10 Solutions
Labor Economics
Ch. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 10RQ
Ch. 10 - Prob. 11RQCh. 10 - Prob. 12RQCh. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10PCh. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Major League Baseball players are not eligible for...Ch. 10 - Prob. 15P
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- Consider two provinces that adopt different laws concerning labour unions. The following graph shows the labour market in a province in the West. Initially, the market-clearing wage is $10 per hour. Suppose that the legislature in this western province passes laws that make it easy for workers to join a union. Through collective bargaining, the union negotiates a wage of $16 per hour. Use the black point (plus symbol) to show how many union workers will be employed at the $16 wage. (Hint: Be sure to place the point on the appropriate curve.) Labour Market in the West 20 18 Union Negotiations 16 14 Supply 12 10 2 Demand ㅇ 4 6 8 10 12 14 18 18 20 LABOUR (Millions of workers) The following graph shows the labour market in a province in Eastern Canada. The legislature in this province passes strong right-to-work laws that make it very difficult for unions to organize workers, so the wage is always equal to the market-clearing value. Except for this difference in legislation, the two…arrow_forwardEnter $10.00 into the box labeled Wage on the previous graph. Hint: Be sure to pay attention to the units used on the graph. At the union wage, union workers will be employed. The following graph shows the labor market in a state in the East. Suppose the legislature in this state passes strong "right-to-work" laws that make it very difficult for unions to organize workers, so the wage is always equal to the market-dearing value. Assume that with the exception of this difference in legislation, the western and easter states are extremely similar. The initial position of the graph corresponds to the initial labor market condition in the eastern state before the labor union negotiated the new, higher wage for workers in the western state. Suppose that after the wage goes up in the western state, some workers in the western state lose their jobs and decide to move to the eastern state. Adjust the graph to show what happens to employment and wages in the eastern state. WAGE LABOR Supply…arrow_forwardConsider two states that adopt different laws concerning labor unions. The following graph shows the labor market in a state in the North. Initially, the market-clearing wage there is $8.00 per hour. Suppose that the legislature in this northern state passes laws that make it easy for workers to join a union. Through collective bargaining, the union negotiates a wage of $10.00 per hour. At the union wage, how many union workers will be employed?arrow_forward
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- Think about the labor market for orthodontists in the United States. Suppose a union is organized, and it successfully increases job qualification standards, meaning orthodontists have to acquire additional skills to meet the new standard. Assume the value of the marginal product does not change. All else equal, which labor market curve is impacted by the organization of a union and what happens to orthodontists' wages : and employment? labor demand shifts left; wage decreases and employment decreases O labor demand shifts right; wage increases and employment increases O labor supply shifts left; wage decreases and employment increases O labor supply shifts right; wage increases and employment decreases O labor supply shifts left; wage increases and employment decreasesarrow_forwardConsider the labor market for electricians. The demand curve is downward sloping and the supply curve is upward sloping. In this market, however, there is a strong labor union. Assume that the electrician’s union is able to negotiate a new contract that substantially raises their member's wages. Select the correct statement.arrow_forwardAnswer the following questions based on the diagram below, in which Ij and I2 are the indifferent curves of labour union, Tị and n2 are the isoprofit curves, and DL is the labour demand curve. Wc is the wage rate in a perfectly competitive market. I2 Wc DL Qc Quantity of labour Wage ratearrow_forward
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