Unions tend to increase the disparity in pay between insiders and outsiders by ?
Correct answer: D. Increasing the wage in the Unionized sector which may create an increase in the supply of workers in the non-unionized sector
- A. increasing the wage in the Unionized sector, Which may create a decrease in the supply of workers in the non-unionized sector
- B. Increasing the demand for workers in the Unionized sector
- C. decreasing the demand for workers in the Unionized sector
- D. Increasing the wage in the Unionized sector which may create an increase in the supply of workers in the non-unionized sector
Explanation
A union wage above the competitive level can push some workers into the non-unionised sector, increasing labour supply there and putting downward pressure on non-union wages. This widens the pay gap between union insiders and outsiders.
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