In the short run,union wages are insensitive to changes in the unemployment rate compared to wages in the nonunion sector.

Question

Quizplus · Accepted Answer

Union wages are typically established through collective bargaining agreements that set fixed wage rates and are often in effect for several years. As a result, changes in the unemployment rate may not immediately impact union wages. In contrast, nonunion wages are generally more flexible and can adjust in response to changes in labor market conditions, including unemployment rates.

In the Short Run,union Wages Are Insensitive to Changes in the Unemployment