Consider two labour markets in which jobs are equally attractive in all respects other than the wage rate. All workers are equally able to do either job. Initially, both labour markets are perfectly competitive. If a union organizes workers in one of the markets, then the wage rates will tend to

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Quizplus · Accepted Answer

When a union organizes workers in one market, it typically negotiates higher wages for its members. This can lead to a surplus of labor in the non-union market, causing wages to fall there due to increased labor supply.

Consider Two Labour Markets in Which Jobs Are Equally Attractive