Suppose a study finds that union wages are 10% higher than nonunion wages.This will likely overstate the true advantage of working in the union job when

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The study finding that union wages are 10% higher than nonunion wages may be affected by selection bias, as workers who are less productive or skilled may be less likely to be hired by unionized employers. Therefore, non-union jobs may have a higher proportion of skilled workers, which would mean that the actual advantage of working in a union job may be lower than 10%. Additionally, the poor working conditions in the union job may also reduce the attractiveness of the higher wage, which could further reduce the advantage of working in the union job. However, the fact that workers who lose union jobs may seek out non-union jobs (choice C) could bias the comparison in favor of the union jobs, as these workers may have lower bargaining power and accept lower wages than they would if they had not been displaced. Therefore, the actual advantage of working in a union job may be lower than 10% if the study does not account for this selection bias.

Suppose a Study Finds That Union Wages Are 10% Higher