"The union wage advantage is understated because nonunion wages rise as consumer demand shifts away from relatively higher priced union produced goods." This describes the:

Question

Quizplus · Accepted Answer

The statement refers to the product-market effect, which suggests that as consumers switch to lower-priced goods produced by nonunion workers, the wages of these workers tend to rise, thereby reducing the wage gap between union and nonunion workers. This effect can cause the union wage advantage to be understated.

"The Union Wage Advantage Is Understated Because Nonunion Wages Rise