Influence Of Trade Unions On Wage Determination And Employment In A Labour Market
Economics notes
Influence Of Trade Unions On Wage Determination And Employment In A Labour Market
➡️ Imperfect markets are those in which there is an unequal distribution of information and power between employers and employees. This can lead to wages being determined by factors such as the bargaining power of employers, the availability of alternative employment opportunities, and the level of competition in the labor market.
➡️ Wage determination in imperfect markets is often based on the principle of monopsony, which states that employers have the power to set wages below the equilibrium level. This can lead to wages being lower than they would be in a perfectly competitive market.
➡️ Governments can intervene in imperfect markets to ensure that wages are fair and equitable. This can include setting minimum wages, providing tax incentives to employers, and introducing collective bargaining agreements.
How do trade unions affect wage determination in a labour market?
Trade unions can influence wage determination by negotiating with employers on behalf of their members. They can demand higher wages, better working conditions, and other benefits. This can lead to higher wages for unionized workers, but it can also lead to higher costs for employers, which may result in reduced employment opportunities for non-unionized workers.
What is the impact of trade unions on employment in a labour market?
The impact of trade unions on employment can be both positive and negative. On the one hand, trade unions can help to protect workers from unfair treatment and improve working conditions, which can lead to increased job satisfaction and reduced turnover. On the other hand, trade unions can also make it more difficult for employers to hire and fire workers, which can lead to reduced employment opportunities, particularly for non-unionized workers.
How do trade unions influence the overall functioning of a labour market?
Trade unions can have a significant impact on the overall functioning of a labour market. By negotiating with employers on behalf of their members, trade unions can help to set wage and benefit standards that can influence the wages and benefits of non-unionized workers as well. However, trade unions can also create barriers to entry for new workers, which can limit competition and reduce efficiency in the labour market. Additionally, trade unions can sometimes engage in strikes or other forms of labour action, which can disrupt the functioning of the labour market and lead to economic losses for both employers and workers.