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Consider an economy with two labor markets—one for manufacturing workers and one for service workers. Suppose initially that neither is unionized. a. If manufacturing workers formed a union, what impact would you predict on the wages and employment in manufacturing? b. How would these changes in the manufacturing labor market affect the supply of labor in the market for service workers? What would happen to the equilibrium wage and employment in this labor market?

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Principles of Macroeconomics (Mind...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305971509
BuyFind

Principles of Macroeconomics (Mind...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305971509

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Chapter
Section
Chapter 15, Problem 8PA
Textbook Problem

Consider an economy with two labor markets—one for manufacturing workers and one for service workers. Suppose initially that neither is unionized.

a. If manufacturing workers formed a union, what impact would you predict on the wages and employment in manufacturing?

b. How would these changes in the manufacturing labor market affect the supply of labor in the market for service workers? What would happen to the equilibrium wage and employment in this labor market?

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