Deck 15: Union Impact on Wage and Non-Wage Outcomes

Question 1

As the fraction of the industry's labour force that is unionized , the possibility for the ________ of non-union labour for union labour declines, reducing the ________
For union labour.

A) increases; differentiation; demand
B) increases; substitution; elasticity of demand
C) increases; substitution; elasticity of supply
D) decreases; combination; requirements
E) decreases; comparison; chance

Answer 1

B

Question 2

Assume that the following annual earnings (Y) equations were estimated separately for union (subscript U) and non-union (subscript N) workers. ED denotes years of education (averaging 14 for union workers and 16 for non-union workers), SEN denotes years of seniority with the company (averaging 12 for union workers and 10 for non-union workers).
YU = 22,000 + 1000 EDU + 1000 SENU
YN = 8000 + 2000 EDN + 500 SENN
Based on 15-01, what is the total union-non union wage differential?

A) 4000
B) 2000
C) 60000
D) 5000
E) 3000

Answer 2

E

Question 3

Assume that the following annual earnings (Y) equations were estimated separately for union (subscript U) and non-union (subscript N) workers. ED denotes years of education (averaging 14 for union workers and 16 for non-union workers), SEN denotes years of seniority with the company (averaging 12 for union workers and 10 for non-union workers).
YU = 22,000 + 1000 EDU + 1000 SENU
YN = 8000 + 2000 EDN + 500 SENN
What is the pure union earnings premium after adjusting the differences in their characteristics that impact their earnings?

A) 5000
B) 2000
C) 3000
D) 4000
E) 60000

Answer 3

E

Question 4

In the context of modeling the impact of unionization, the simultaneity issue refers to the fact that:

A) Longitudinal data is used, which renders the estimation of the union wage effect.
B) The union status of a worker and the union wage effect are jointly determined, which renders the estimation of the union wage effect.
C) Union wages are determined at the same time as non-union wages, which renders the estimation of the union wage effect.
D) The threat effect can operate at the same times as the wait-unemployment effect, which renders the estimation of the union wage effect.
E) There is variation in the union wage impact across types of firms and workers, which renders the estimation of the union wage effect.

Question 5

Assume that the following annual earnings (Y) equations were estimated separately for union (subscript U) and non-union (subscript N) workers. ED denotes years of education (averaging 14 for union workers and 16 for non-union workers), SEN denotes years of seniority with the company (averaging 12 for union workers and 10 for non-union workers).
YU = 22,000 + 1000 EDU + 1000 SENU
YN = 8000 + 2000 EDN + 500 SENN
What do the coefficients of the equations in Reference 15-01 stand for?

A) Unions bargain for seniority-based wage increases.
B) Unions tend to bargain for a more compressed structure that gives a higher base pay.
C) Unions reduce the returns to skill-based characteristics such as education.
D) All of choices are correct.
E) None of choices is correct.

Question 6

The percentage difference in wages between union and otherwise comparable non-union workers is called:

A) the union discrimination effect.
B) the union wage effect.
C) the marginal union-non-union product.
D) the union-non-union wage differential.
E) the unionization effect.

Question 7

In the context of the impact of unionization on the firm, "shock effects" assume that:

A) Organizational slackness exists in the firm's production process.
B) Unions impose many costly, inefficient practices on firms.
C) The cost efficiency of the firm is high.
D) Working conditions are so shocking that the workers vote to unionize.
E) The net impact of the effects of unionization on a firm's productivity is ambiguous.

Question 8

The magnitude of the union-non-union wage differential depends on all of the following, except:

A) the elasticity of labour demand in each sector.
B) the substitutability between two sectors of workers in the same industry.
C) the ability of the union to raise wages in the organized sector.
D) the elasticity of labour supply in the non-union sector.
E) the size of the union sector relative to the non-union sector.

Question 9

Over the past few decades, at least 25 studies have been published in Canada that deal with empirical estimates of the union-non-union wage differential. These estimates tend to indicate a value in the neighbourhood of:

A) 25-30%
B) 0-10%
C) 10-25%
D) 10-15%
E) 30-40%

Question 10

The wage differential between union workers and comparable non-union workers ________ with firm's or establishment's _.

A) increases; degree of market power
B) declines; size
C) decreases; degree of market power
D) increases; level of benefits
E) declines; level of benefits

Question 11

Which of the following is NOT the result from the empirical research on the wage impact of Unions?

A) In unionized enterprises, wage differences among workers who differ according to various productivity-related characteristics are smaller than non-union enterprises.
B) Unionization likely lowers the total compensation of CEOs as well as bonus and stock options.
C) There are significant wage differentials between union and non-union workers.
D) Recent evidences show that union sector has a negative impact on non-union wages.
E) The union-non-union wage differential is generally higher in the private than the public sector.

Question 12

Which of the following is NOT a factor related to the deadweight loss associated with union wage impact?

A) the elasticity of labour demand
B) the elasticity of labour supply
C) the amount of queuing unemployment
D) the extent to which firms and unions negotiate wage-employment outcomes to the right of the demand curve
E) All the answer choices are associated with union wage impact.

Question 13

In assessing the impact of unionization on the allocation of labour within the labour market, the area under the labour demand curve equals:

A) the reduction in employment in the union sector.
B) the total loss of the output produced.
C) the gain in employment in the non-union sector.
D) the total value of the output produced.
E) the real resource losses.

Question 14

In an analysis of the union-non-union wage differential, a complication is the fact that:

A) There are not very many unionized workers.
B) One has to consider the minimum wage as well.
C) Unions can have an impact on the wages of non-union workers.
D) Unions can impact public policy.
E) Unions can influence productivity.

Question 15

The term "queue" or "wait" unemployment is used to describe the fact that:

A) Because union jobs pay relatively well, it may be rational to wait for a union job to open up rather than seek employment elsewhere.
B) The only jobs that are worth taking are those that workers queue up for.
C) All of the workers who are unable to obtain jobs in the primary labour market will seek employment in the secondary market.
D) All of the workers who are unable to obtain jobs in the union sector will wait for employment opportunities in the non-union sector.
E) Individuals may wait in a queue of jobless workers in order to obtain the first job to open up in the labour market.

Question 16

Compared to the case of an individual worker bargaining with his/her firm, the financial returns to additional amounts of education or experience are generally with collective bargaining, thus for the most skilled category, the non-union workers earn
________.

A) lower; less
B) the same; the same
C) higher; less
D) lower; more
E) higher; more

Question 17

The primary sector of the dual labour market consists of firms and/or industries that do not have which of the following characteristics?

A) The nature of production
B) Concentration in the product market
C) Establishment size
D) Generally stable and secure employment relationships
E) A spot market for labour

Question 18

In the context of estimating the union wage effect, which of the following statements concerning "selection bias" is false?

A) Whenever there is a queue of workers applying for union jobs, employers tend to hire the most productive of them.
B) Unionized workers might not have identical characteristics to non-unionized workers, insofar as their levels of marginal productivity are concerned.
C) Workers are hired into union jobs according to a randomized selection process.
D) Factors that are not observed by the researcher influence the outcome of whether or not the worker is represented by a union.
E) Workers are hired into union jobs according to a fixed selection process.

Question 19

Which of the following statement in regards to cross-sectional data and longitudinal data is correct?

A) Both cross sectional and longitudinal data can provide repeated estimates over time.
B) Longitudinal data compare different individuals at one point in time.
C) Cross-sectional estimates compare different individuals at one point in time.
D) Longitudinal data do not provide a way of removing the effects of person-specific characteristics.
E) Cross-sectional estimates compare different individuals over time.

Question 20

Due to collective bargaining coverage, voluntary quitting, also known as , is reduced as a result of high wages, and hence workers seek to have more of a say, also known as , in their terms of employment.

A) exit; voice
B) selective unemployment; union incidence
C) selective unemployment, pressure tactics
D) exit, collective pressure
E) voice; exit

Question 21

When some non-union employers raise wages in order to reduce the possibility that their employees will choose to become unionized, it is called:

A) the efficiency wage effect
B) the threat effect
C) the queuing effect
D) the displacement effect
E) the anti-organization effect

Question 22

It is time to play point-counterpoint. In the far corner, we have a representative from the Canadian Labour Congress. Opposing her in the near corner is a representative from the Canadian Federation o Independent Business.
• First, assume the role of union supporter. The assertion is that unions raise living standards for al workers at the expense of holders of capital-i.e., unions rob Peter to pay Paul. Analyze this claim by applying the threat effect model of unionization in the two-sector framework. You should provide graphical analysis. Continuing in this role as a union supporter, what impact do you believe unions have on the distribution of wages? In other words, which groups of workers benefit the most from unionization? Does it reduce inequality throughout the economy?
• Now assume the other role. The assertion now is that unions raise the wages of unionized worker at the expense of workers in the non-union sector. In other words, unions rob Peter to pay Peter. Analyze this claim by applying the crowding model of unionization in the two-sector framework. Yo should provide a graphical analysis.
• Now it is time to appeal to the empirical evidence. What have studies tended to show about the magnitude of the union-non-union wage differential? What does the evidence show concerning the impact of unions on the dispersion of wages throughout the economy? Which groups of workers tend to benefit the most and the least from unionization (i.e., blue-collar versus white-collar workers, higher- skill versus lower-skill workers, unionized versus non-unionized workers)?
• According to union ideology, wages should not be determined on an individual basis based on th individual worker's productivity. What factors should determine wages? What are the values that underlie most union wage structures?

Question 23

Consider the two-sector model of general equilibrium. In the case of Pareto-efficient bargaining between the firm and the union, which means that the wage-employment outcome lies to the right of the labour demand curve, the effect of the union on employment levels is:

A) larger than what would be the case if the threat effect was present.
B) greater than what would otherwise be the case.
C) less than what would otherwise be the case.
D) non-existent, as that factor is irrelevant.
E) the same as would be the case if the wait-unemployment effect was present.

Question 24

Recent reviews of the impact of unions on employers' productivity levels tend to indicate that:

A) The union effect on productivity is insignificant.
B) The union effect on productivity is small and negative in the US.
C) The union effect on productivity is large and negative in the US.
D) The union effect on productivity is large and positive in the US.
E) The union effect on productivity is small and positive in the US.

Question 25

The distribution among unionized workers is both ________ and dispersed than the distribution of wages among non-unionized workers.

A) higher; equally
B) lower; more
C) higher; less
D) higher; more
E) lower; less