Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364



Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

D0 countries with a higher percentage of unionized workers usually have less growth in productivity because of strikes and other disruptions caused by the unions? Why or why not?

To determine

Whether the higher percentage of unionized workers in a country cause less productivity due to factors such as strikes and disruptions caused by the unions or not is to be determined along with the reasons.


Business is capitalistic. However, the unions know that their command over workforce is directly related to how much better deal they can extract from the company in terms of wages, benefits etc. from management. As any company will not willingly agree to share its profitability with its workers in form of higher wages, better amenities etc., unions frequently resort to strikes to prove their relevance.

  • However, strike affects productivity in a large number of ways. There are many industries e.g. steel (where the blast furnace cannot be simply shut for a day) where you cannot halt the operations. In many cases, a basic operation is kept on to prevent huge losses. When the strike persists beyond a day, sectors like steel making, mining, and manufacturing get halted. This leads to a huge drop in productivity and even damage of equipments.
  • You cannot substitute a miner by somebody who is working in the field. Similarly, you cannot replace an electrician working in a power plant by a commoner...

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