What is the effect of unions on wages and employment?
A) Unions are unlikely to affect wages and employment.
B) Unions raise wages above the competitive equilibrium level.
C) Unions increase the level of employment in unionized firms.
D) Unions decrease the level of employment in nonunionized firms.

Question

Quizplus · Accepted Answer

Unions negotiate with employers for better wages and benefits for their members, which can raise wages above the competitive equilibrium level. However, this can lead to employers choosing to hire fewer workers or outsource work to nonunionized firms in order to reduce labor costs, potentially leading to a decrease in employment overall. So, while unions can have a positive effect on wages, their impact on employment is more complicated and depends on various factors.

What Is the Effect of Unions on Wages and Employment