W4P4 - Collective Labour Supply Flashcards
1
Q
In the model of collective labour supply, how are the EMPLOYED WORKERS better or worse off due to the existence of unions?
A
Those who are actually employed are better off as they receive a higher
wage than in a case without unions.
2
Q
In the model of collective labour supply, how are the EMPLOYED WORKERS better or worse off due to the existence of unions?
A
Unemployed workers are worse off because now at the higher union wage they are unable to find a job. This is similar to the introduction of a binding minimum wage in our labour market model, where those who still have a job will be better off as they now have higher wages.
