While labour unions tend to negotiate above-equilibrium wage rates for their members, they also tend to reduce the quantity of labour hired.

Question

Quizplus · Accepted Answer

This is due to the fact that when unions negotiate for higher wages, it increases the cost of labor for the employer, making it less profitable to hire as many workers. As a result, some employers may reduce the quantity of labor hired, leading to a decrease in employment levels. This phenomenon is known as the union wage effect or the union employment effect.

While Labour Unions Tend to Negotiate Above-Equilibrium Wage Rates for Their