Question

3. Contrasting labor union laws in two states Consider two states that adopt different laws concerning labor unions. The following graph shows the labor market in a state in the North. Initially, the market-clearing wage is $10 per hour. Suppose that the legislature in this northern state passes laws that make it easy for workers to join a union. Through collective bargaining, the union negotiates a wage of $16 per hour. Use the black point (plus symbo) to show how many union workers will be employed at the $16 wage. (Hint: Be sure to place the point on the appropriate curve.) Labor Market in the North 20 18 Union Wage Union Negotiations 16 14 upply 12 Demand 2 10 12 14 16 18 20 LABOR (Millions of workers)

Answer 1

only 2 million figure below: Labor Market in the North 20 18 16 nion Wage Union Negotiaions 12 0 468 012 14 16 18 20 LABOR (Millions of workers) The wage rate of 16 intersects with demand curve at a point corresponding to which only 2 million labors are employed. The unemployed labor of North moves to South which increases the supply of labor in the south The effect is shown in figure below

Labor Market in the South Su Demand Supply 1. mand LABOR The increase in supply of labor shifts the supply curve rightward corresponding to which wages decreases and labor increases in south market