Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.
PART 9 The Real Economy in the Long Run
Chapter 28 of 36 Unemployment
Section 17 of 22
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Critics of unions argue unions are a type of cartel.
When unions raise wages above the level equilibrium level of competitive markets
· the quantity of labor demanded is reduced
· some workers become unemployed
· wages in the rest of the economy are reduced, because of increased supply of nonunion workers
The resulting allocation of labor is both inefficient and inequitable.
Inefficient because high union wages reduce employment in unionized firms below the efficient and competitive level.
Inequitable because some union workers benefit at the expense of other non-union workers.
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Union advocates contend unions are a necessary to counter-balance market power of firms.
Excessive market power of a company most common causes are
· the company town where there is a single large company
· it is the main employer in a geographical region
In a company town if workers do not accept the wages and working conditions the firm offers, their choices become to move away or stop working.
In the absence of a union in a company town, the firm could use its market power to pay lower wages and maintain worse working conditions than would prevail if the firm had to compete with other firms when hiring workers.
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In the company town case a union may counter-balance the firm's market power and protect the workers from dictates of firm's owners.
Advocates also claim unions help firms by making them to respond efficiently to workers' needs and concerns, including work hours, overtime, vacations, sick leave, health benefits.
Thereby unions offer the benefit to firms of helping them keep a happy and productive workforce.
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there is no consensus among economists
keizai gakusha no aida de sōi wanai
経済学者 の 間 で 総意 は ない
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