Labor ECON Chp. 10

The Labor-Management Relations Act o 1947 (The Taft-Hartley Act)

Curbed union power by permitting states to pass right-to-work laws, which prohibit unions from requiring workers to join the union. Also permits workers to hold elections to decertify the union.

The National Labor Relations Act of 1935 (The Wagner Act)

Defined a set of unfair labor practices. Required employers to bargain tin good faith. Prohibited the firing of workers involved in union activities.

How does asymmetric information provide an explanation for the rationality of strikes?

Enduring a strike is the only means by which the firm can convince the union that it is not as profitable as the union thinks it might be.

Unions are more successful at negotiating high wages and low employment loses if the elasticity of union labor demand is inelastic. Why?

Inelastic labor demand means when the wage increases by x%, the firm reacts by reducing its labor by less than x%.

The unionization rate of the civilian labor force was over 25% in the 1950s and 1960s. A steady decline began in the 1970s, with a speedup in the decline in the 1980s. What is the unionization rate of the civilian labor force presently?

Just under 12%

What was the main legal argument to prohibit the formation of unions prior to the New Deal?

Labor unions restricted free trade, especially interstate trade, which was a violation of the Sherman Act.

Which of the following is not a possible explanation for why the unionization rate in the United States has fallen so dramatically over the last 30 years?

Laws governing public sector unionization have become tougher on unions.

Why is it that arbitration frequently constrains the bargaining power of public sector unions?

Most states prohibit public workers rom striking, and this weakens a public sector union as its negotiation tactics are limited.

According to the "threat effect", the union wage gap underestimates the true impact of unionization on wages. Why?

Nonunion firms increase their wages in order to deter its workers from forming union.

National unions tend to engage in which one of the following activities?

Political lobbying and providing legal expertise to locals.

The Labor-Management Reporting and Disclosure Act of 1959 (The Landrum-Griffin Act)

Required complete disclosure of union finances, and requires unions to hold regularly scheduled elections.

The Norris-LaGuardia Act of 1932

Restricted the firm's ability to use court orders and injunctions to hamper union organization. Made yellow-dog contracts unenforceable in federal courts.

Select all that apply Studies show the creation of teachers unions has the following widespread effects: teacher pay raises student achievement improves dropout rates increase pupil-teacher ratios increase increase in per-pupil spending

Teacher pay raises Dropout rates increase Increase in per-pupil spending

Why do the firm's isoprofit curves in employment-wage space take a maximum on the firm's labor demand curve?

The labor demand curve is the profit-max amount to hire at every possible wage. Thus, any less or more employment results in less profit.

Why is union formation more likely the more inelastic is the firm's labor demand curve?

The more inelastic is the firm's labor demand curve, the less the firm's employment response is to a higher wage demand.

Which of the following statements best describes strike activity in the United States?

The total amount of worker time lost to strikes is extremely small.

Describe the historical trend in the union wage gap in the United States since 1970.

The union wage gap has hovered between 15% and 20% since 1970 to the present.

Which of the following conditions does not capture the equilibrium of the standard monopoly union model?

The wage-employment outcome is on a lower union indifference curve compared to the indifference curve attained under the competitive wage.

What is meant by the claim that the wage distribution for unionized workers has less dispersion than that for nonunion workers?

There is less of a spread in wages across all workers at union firms than at nonunion firms.

What was the unionization rate of the civilian workforce prior to pro-union New Deal legislation and court rulings?

Under 10% of workers were unionized prior to the New Deal.

According to the "spillover effect", the union wage gap overestimates the true impact of unionization on wages. Why?

Unionized firms cut employment which increases the supply of workers to nonunion firms who then compete the competitive non-union wage down.

In addition to higher wages, unions also typically negotiate _____ compared to nonunion firms.

a greater fringe benefits package

After a strike is settled, Hicks argued that both sides "regret" the strike, because the time lost to a strike

costs the union wages and costs the firm profits.

Workers are more likely to support unionization when the union organizers promise

high wages and relatively low employment losses.

If the firm's demand curve for labor is inelastic, the union wage-offer shifts the worker to a

higher indifference curve and the worker supports the election of the union.

An efficient contract requires the union and firm to bargain over wages and employment, with an outcome that is associated with

higher wages and more employment compared to the competitive solution.

The Hicks paradox argues that strikes are a(n) _____ outcome to a negotiation as both sides would be better off reaching the same settlement without enduring a strike.

inefficient

Yellow-dog contracts stipulated as a condition of employment that the worker would not

join a union.

When union contracts are strongly efficient, the level of employment in the union firm

should be unrelated to the union wage but would instead depend on the competitive wage.

The public sector wage gap is probably less than what people expect because

state and local governments do face revenue constraints.

A contract is strongly efficient only if

the contract curve is vertical so that the firm hires the same amount of labor regardless of the wage.

The standard definition of the union wage gap is

the difference between the average union wage and the average non-union wage, all divided by the average non-union wage.

With about 36% unionization, the strongest union presence in the U.S. economy currently is in

the public sector

The most common explanation for the rationality of strikes is asymmetric information usually meaning that

the union doesn't have an much information as the firm about the firm's profitability.

Featherbedding occurs when

the union requires the firm to employ more workers than are necessary to complete a certain task.

The typical model of a monopoly union assumes that

the union sets the wage, and then the firm is allowed to hire the profit-maximizing amount of labor given the wage.

The wage-employment solution implied by the monopoly union model is inefficient because

the union solution imposes a s redistribution of labor which necessarily reduces the total contribution of labor to economic output.

The typical model of union behavior assumes that the union values

wages and employment, wanting more of both.

Selection bias implies that the union wage effect overestimates the actual wage gain. The reason is that a highly productive union worker

would likely be a highly productive non-union worker

The public sector wage gap in the United States is estimated to be

5 to 10%

What is the union wage gap if the average union wage is $30 and the average non-union wage is $20?

50%