3. Contrasting labor union laws in two states Consider two labor markets, an eastern state and a western state, that enact different laws governing labor unions. The following graph illustrates the labor market for the state in the East. Initially, the market-clearing hourly wage is $24. Suppose that the government in this eastern state passes a law that makes it easier for workers to become union members. Through a process of collective bargaining, the union negotiates an hourly wage of $36. Use the black point (plus symbol) to show how many union workers will be employed at the $36 wage. (Hint: Be sure to place the point on the appropriate curve.) Use the black point (plus symbol) to show how many union workers will be employed at the $36 wage. (Hint: Be sure to place the point on the appropriate curve.) Refer to the attachment screenshot. The following graph illustrates the labor market for the state in the West. The government in this state passes a strong “right-to-work” law that makes it much more challenging for unions to organize workers, so the wage is always equal to the market-clearing value. With the lone exception of this legal difference, assume the two states to be extremely similar. Initially, the graph corresponds to the labor market conditions in the western state prior to the labor union negotiating the new, higher wage for eastern state workers. Adjust the graph to show what happens to employment and wages in the western state after some workers in the eastern state lose their jobs and choose to move to the western state. Refer to the attachment screenshot.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. Contrasting labor union laws in two states

Consider two labor markets, an eastern state and a western state, that enact different laws governing labor unions.

The following graph illustrates the labor market for the state in the East. Initially, the market-clearing hourly wage is $24. Suppose that the government in this eastern state passes a law that makes it easier for workers to become union members. Through a process of collective bargaining, the union negotiates an hourly wage of $36.

Use the black point (plus symbol) to show how many union workers will be employed at the $36 wage. (Hint: Be sure to place the point on the appropriate curve.)

Refer to the attachment screenshot.

The following graph illustrates the labor market for the state in the West. The government in this state passes a strong “right-to-work” law that makes it much more challenging for unions to organize workers, so the wage is always equal to the market-clearing value. With the lone exception of this legal difference, assume the two states to be extremely similar.

Initially, the graph corresponds to the labor market conditions in the western state prior to the labor union negotiating the new, higher wage for eastern state workers.

Adjust the graph to show what happens to employment and wages in the western state after some workers in the eastern state lose their jobs and choose to move to the western state.

Refer to the attachment screenshot.

WAGE (Dollars)
40
36
32
28
24
20
18
12
8
4
0
0
4
8
Labor Market in the East
Union Wage
Supply
12 16 20 24 28
LABOR (Millions of workers)
32 36 40
+
Union Negotiations
?

WAGE
Labor Market in the West
LABOR
Supply
Demand
Demand
Supply

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