Labor Economics 5th Edition by George Borjas

تمرين 12

Suppose the value of the marginal product of labor in the steel industry (in dollars peryear) is VMP E = 100,000 - E dollars per year, where E is the number of steel workers. The competitive wage for the workers with the skills needed in steel production is $30,000 a year, but the industry is unionized so that steel workers earn $35,000 a year. The steelworkers' union is a monopoly union. What is the efficiency cost of the union contract in this industry