Term 2 - Chapter 7 Flashcards Preview

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Flashcards in Term 2 - Chapter 7 Deck (12)
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1
Q

Why are big firms and public sector more unionised?

A

Benefits are greater - bigger ‘union markup’ available

Costs of organising lower

2
Q

Draw the models of union wage-setting graph and explain

A

Notes

3
Q

Can unions set employment as well as wages?

A

The point is that unions may be able to set employment as we,l as wages - these contracts will be ‘off the demand curve’ and will be ‘efficient’ because Union gains jobs and firms no worse off

If off the demand curve bargains occur, union must have power to stop firms cutting employment when wages are raised

Obviously efficient bargaining leads to less employment loss

4
Q

Explain the data behind extended collective agreements

A

Coverage of collective agreements is higher than union density (non union workers receive union wages)

France is extreme: union density approx 10% but coverage approx 90% due to extended agreements

U.K. had extended collective agreements in the 70s under labour

Martin et al use OECD data to show that extended collective agreement coverage increased unemployment, particularly when taxes are high

The implication is that extended collective agreements cause wage inflexibility which stops wages falling when taxes rise

5
Q

Draw the graph illustrating how high taxes magnify the MW or union wage disemployment effect

A

Notes

6
Q

Explain what corporatism is

A

Extended agreements are an aspect of corporatism - main union and employer orbs ‘incorporated’ into government, ‘centralisation’

EU stresses social partners = corporatism

Incorporation means “encompassing coalitions” - unions more responsible

Conclusion: strong unionism can be good if incorporated into government

7
Q

Explain the positives and negatives of corporatism

A

Corporatism = centralisation and bargaining coordination

Corporatism reduces unemployment

But corporatism also means high taxes, employment protection and welfare benefits, all of which raise unemployment

So corporatism has problems but it may be a way of taming unions

8
Q

Draw the graph unions and output graph

A

Notes

9
Q

Draw the unions and strikes graph

A

Notes

10
Q

Explain why there is a negative link between earnings compression and unemployment

A

When pay at the bottom rises, the 90:10 ratio falls. At the same time, unemployment rises for those at the bottom (since D curves slope downwards). Hence unemployment rises as the 90:10 ratio falls.

Unions come into the picture because they aim to raise the pay of those at the bottom, and there is a concomitant rise in unemployment of those at the bottom, just as in the graph.

11
Q

Do unions help wage inequality?

A

Unions must reduce wage inequality, at least at the bottom end (top end responds to bonuses in the city for example)

If unions reduce job opportunities for outsiders (young, ex offenders), then more on welfare - but if welfare benefits good, no problem?

But good welfare benefits do not make up for lack of a job - unemployed are v unhappy

We can think of the ‘job distribution’ too - high long term unemployment means jobs are unequally distributed

So we come back to unemployment, specifically long term unemployment

12
Q

What is the British policy in trade unions?

A

Notes