The crowding effect:
A)increases wages in the non-union sector
B)decreases wages in the non-union sector
C)increases productivity in the non-union sector
D)decreases productivity in the non-union sector
E)increases investment in the union sector

Question

Quizplus · Accepted Answer

The crowding effect occurs when the presence of a unionized sector leads to lower wages in the non-unionized sector due to increased competition for jobs. This happens because workers in the non-unionized sector have fewer employment options and are thus willing to accept lower wages. Therefore, the crowding effect decreases wages in the non-union sector.

The Crowding Effect