Question 1

Which country has the lowest percentage of unionized workers?

Accepted Answer

According to a 2020 report by the Organization for Economic Cooperation and Development (OECD), the United States has the lowest percentage of unionized workers among its member countries, with only 10.8% of its workforce being members of a union. Canada has a unionization rate of 28.2%, Sweden has 67.7%, and Denmark has 68.4%.

Question 2

What was the purpose of Canada's Public Service Staff Relations Act of 1967?

Accepted Answer

The purpose of Canada's Public Service Staff Relations Act of 1967 was to allow federal public service employees the right to representation and collective bargaining. The act recognized the right of federal public service employees to form and join unions, and established the Public Service Labour Relations Board to oversee collective bargaining and labour disputes in the federal public service.

Question 3

Aaron is the owner of a firm that produces wind power in southern Alberta. There are many such firms in the area. Aaron decides that if he pays his workers a wage higher than the going market wage, his profits will increase. What is a likely explanation for his decision?

Accepted Answer

By paying his workers a higher wage than the going market wage, Aaron is likely hoping to reduce the turnover rate among his workers. This would mean that he would not have to spend as much money and time hiring and training new workers. High turnover rates can also lead to decreased productivity and increased mistakes, which could result in lower profits. By keeping experienced and skilled workers, Aaron may be able to increase his profits in the long run.

Question 4

Regarding the categories of unemployment, which statement best describes how the effect of sectoral changes compares to the effect of firms paying higher-than-equilibrium wages?

Accepted Answer

The answer of Regarding the categories of unemployment, which statement...

Question 5

What is the most likely result of efficiency wages?

Accepted Answer

Efficiency wages are higher than the market-clearing wage, given by employers to motivate workers to work harder and be more productive. This reduces the incentive for employees to shirk their responsibilities because they risk losing a job that pays above the market rate.

Question 6

What do the laws governing the activity of labour unions achieve?

Accepted Answer

The laws governing the activity of labour unions achieve the goal of allowing workers the right to representation and collective bargaining. They protect the rights of workers to form and join unions, negotiate wages and working conditions, and to strike if necessary. Option A is incorrect because unions are allowed to act as long as they follow the rules set by the government. Option B is not entirely true as "right to work" laws vary by state and not all states allow workers to choose not to join the union. Option D is incorrect because the government does not limit the number of unionized organizations, but they do require certain criteria to be met for unionization to occur.

Question 7

Mary Sue is the newly appointed CEO of a company that manufactures USB flash drives on an assembly line. Her staff has told her that the output the firm produces, given the number of workers employed, indicates that some workers may be shirking. According to efficiency wage theory, what should she do?

Accepted Answer

According to efficiency wage theory, paying workers more than the equilibrium wage rate can motivate them to work harder and shirk less because they value their higher wages and don't want to risk losing them. This can lead to increased output and profits for the company. Therefore, Mary Sue should consider paying all workers more than the equilibrium wage rate to incentivize them to work harder and reduce shirking.

Question 8

Dawn is the CEO of a corporation that hires nonunion labour. According to the theory of efficiency wages, if she decides to pay her workers more than the competitive equilibrium wage, what is most likely to happen?

Accepted Answer

According to the theory of efficiency wages, paying workers more than the competitive equilibrium wage can result in improved worker motivation and productivity, reduce shirking and turnover, and lead to better quality workers. Therefore, it is likely that Dawn's firm will experience higher profits if she pays her workers more than the market wage.

Question 9

What industry in the Canadian economy has the highest percentage of unionized workers?

Accepted Answer

The public sector includes government employees, such as teachers, healthcare workers, and civil servants, who have traditionally had high rates of unionization. According to Statistics Canada, in 2019, 71.5% of public sector employees were unionized, compared to just 17.6% of private sector employees. Therefore, the public sector has the highest percentage of unionized workers in the Canadian economy.

Question 10

What is, approximately, the percentage of unionized public workers in Canada?

Accepted Answer

The percentage of unionized public workers in Canada is approximately 70 percent, reflecting a high level of unionization within the public sector compared to many other countries.

Question 11

Regarding the categories of unemployment, how does a minimum-wage law compare to firms paying higher-than-equilibrium wages?

Accepted Answer

The answer of Regarding the categories of unemployment, how does...

Question 12

What will an efficient wage most likely do?

Accepted Answer

Efficient wages are above-market wages paid by employers to increase worker productivity, which can lead to increased profitability through higher productivity, reduced turnover, and improved morale.

Question 13

What is a possible effect of unions?

Accepted Answer

Unions negotiate higher wages and better working conditions for their members, which can lead to employers compensating for these increased costs by offering lower wages to nonunionized workers or reducing hiring, potentially causing wages in the nonunion sector to fall.

Question 14

Which province has the highest percentage of unionized workers?

Accepted Answer

According to the most recent data from Statistics Canada in 2020, Quebec has the highest percentage of unionized workers among all provinces in Canada at 37.2%. The other options have unionization rates of Ontario at 21.9%, Newfoundland and Labrador at 27.7%, and British Columbia at 30.2%.

Question 15

What is the effect of unions on wages and employment?

Accepted Answer

Unions have the power to negotiate higher wages for their members, often above the competitive equilibrium level. However, this can lead to lower employment levels as firms may be unable or unwilling to hire as many workers at those higher wage rates.

Question 16

Yohanna, the CEO of a corporation operating in Ethiopia, decides to raise the wages of her workers, even though she faces an excess supply of labour. Which of the following is an expected result from her decision?

Accepted Answer

According to the efficiency wage theory, higher wages can lead to increased productivity and lower turnover rates among workers, as they are more likely to be satisfied and therefore work harder. Therefore, raising wages may result in higher productivity for the corporation.

Question 17

Suppose that in some country neither textile workers nor shoemakers are unionized. If textile workers unionize and so are able to raise their wages, what will most likely happen to shoemakers?

Accepted Answer

When textile workers unionize and raise their wages, some workers might switch from textile to shoemaking due to the relative attractiveness of non-unionized sectors, increasing the supply of shoemakers and potentially lowering their wages.

Question 18

What does the theory of efficiency wages explain?

Accepted Answer

The theory of efficiency wages explains why it may be in the best interest of firms to offer wages that are above the equilibrium level in order to reduce employee turnover, increase productivity, and attract high-quality workers.

Question 19

According to efficiency wage theory, what is a way to increase employees' work effort?

Accepted Answer

According to efficiency wage theory, increasing wages above the market equilibrium can increase employees' work effort by providing an incentive for them to work harder and stay with the company. Option B and D do not directly address the issue of increasing work effort, and option C could potentially lead to decreased work effort and employee turnover.

Question 20

Where is the unemployment rate more likely higher?

Accepted Answer

When EI benefits are higher, people may have less incentive to find jobs because they can rely on the benefits. This can lead to a higher unemployment rate.

Quiz 9: Unemployment and Its Natural Rate