6. Contrasting labor union laws in two states Consider two states that adopt dif

Question

6. 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 there is $10.00 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 $12.50 per hour. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Graph Input Tool Market for Labor 20.0 Wage (Dollars per hour) 17.5 Supp 2.50 Labor Demanded (Thousands of workers) Labor Supplied (Thousands of 15.0 875 125 workers) 12.5 2 7.5 5.0 2.5 125 250 375 500 625 750 875 1000 LABOR (Thousands of workers)

Explanation / Answer

At union wage of 12.5 labor demanded is 375000 and labor supplied is 625000.

At union wage 375000 workers are employed.

The leftward shift in the supply curve in the Southern state is correctly done by you. The supply in southern state decreases as some workers migrate to north to get higher wage.

Due to this wage increases and employment decrease in South.

Workers in the northern state employed at union wage are better off.

All the workers in north and south are not better off as some of the workers who initially employed lost their jobs. Employers are worse off as now they have to pay higher wages.

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