1. State whether the threat effect might cause the measured union wage advantage
ID: 1223939 • Letter: 1
Question
1. State whether the threat effect might cause the measured union wage advantage to be overstated or understated from the pure advantage. Please answer with either overstated or understated.
2.State whether the spillover effect might cause the measured union wage advantage to be overstated or understated from the pure advantage. Please answer with either overstated or understated.
3.State whether the product market effect might cause the measured union wage advantage to be overstated or understated from the pure advantage. Please answer with either overstated or understated.
Explanation / Answer
1. The threat effect might cause the measured union wage advantage to be understated from the pure advantage. This is because rise in wages for union employer is more than non union employer.
2. the spillover effect might cause the measured union wage advantage to be overstated from the pure advantage. This is because due to excess supply in non union market wages falls than union market.
3. he product market effect might cause the measured union wage advantage to be understated from the pure advantage.
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