Trade Union

Question 1

State + explain the micro effects of a trade union.

Answer 1

• Wages + Employment: W rises + unemployment rises in competitive markets. In monopsony markets - W rises + unemployment falls.
• Worker Rights + Protections: TU fight for worker’s rights + protections. Stakeholder impacts.
• Monopsony Labour Market Outcomes: not just increasing W, but also increasing employment.
• Costs To Firms
• Wage Discrimination

Question 2

State + explain the macro effects of a trade union.

Answer 2

• Unemployment: could raise unemployment in traditional L market, but reduce unemployment if there’s lots of monopsony L markets in economy.
• Inflation: due to them fighting for higher W - impose C on firms that could drive up P + cost-push inflation.
• International Competitiveness: worsens international competitiveness. CA deficit worsening.
• FDI: strong TU can actually detract FDI.