3. Contrasting labor union laws in two states Consider two states that adopt different laws concerning labor unions. The

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3. 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 is $12 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 $15 per hour. Use the black point (plus symbol) to show how many union workers will be employed at the $15 wage. (Hint: Be sure to place the point on the appropriate curve. Labor Market in the North + Union Negotiations Supply (Dollars) C D C Union Wage A
WAGE (Dollars) 24 21 18 15 12 BN 9 198 3 0 0 I 603 6 Labor Market in the North Supply Union Wage 27 24 21 Demand 9 18 15 12 LABOR (Millions of workers) 30 + Union Negotiations
The following graph shows the labor market in a state in the South. The legislature in this state passes strong "right-to-work" laws that make it very difficult for unions to organize workers, so the wage is always equal to the market-clearing value. Except for this difference in legislation, the two states are very similar. The initial position of the graph corresponds to the initial labor market condition in the southern state before the labor union negotiated the new. higher wage for workers in the northern state. Adjust the graph to show what happens to employment and wages in the southern state after some workers in the northern state lose their jobs and decide to move to the southern state. Ⓡ Labor Market in the South Supply 10 Demand 101
bols TomcwOTK (CHF19) WAGE Labor Market in the South LABOR Supply Demand Demand 4 Supply