The insider-outsider explanation of job rationing is more likely to apply in firms without union representation.

Question

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The insider-outsider theory of employment primarily applies to labor markets where there are strong distinctions between "insiders" (current employees, often protected by unions) and "outsiders" (unemployed or employed elsewhere, seeking jobs). It suggests that insiders have a stronger bargaining position, which they use to secure higher wages or better working conditions, potentially at the expense of outsiders. This theory is more relevant in contexts with union representation, where the distinction between insiders and outsiders is more pronounced due to the unions' ability to negotiate on behalf of their members.

The Insider-Outsider Explanation of Job Rationing Is More Likely to Apply