It Is Time to Play Point-Counterpoint

question 17

Essay

It is time to play point-counterpoint. In the far corner, we have a representative from the Canadian Labour Congress. Opposing her in the near corner is a representative from the Canadian Federation o Independent Business.
• First, assume the role of union supporter. The assertion is that unions raise living standards for al workers at the expense of holders of capital-i.e., unions rob Peter to pay Paul. Analyze this claim by applying the threat effect model of unionization in the two-sector framework. You should provide graphical analysis. Continuing in this role as a union supporter, what impact do you believe unions have on the distribution of wages? In other words, which groups of workers benefit the most from unionization? Does it reduce inequality throughout the economy?
• Now assume the other role. The assertion now is that unions raise the wages of unionized worker at the expense of workers in the non-union sector. In other words, unions rob Peter to pay Peter. Analyze this claim by applying the crowding model of unionization in the two-sector framework. Yo should provide a graphical analysis.
• Now it is time to appeal to the empirical evidence. What have studies tended to show about the magnitude of the union-non-union wage differential? What does the evidence show concerning the impact of unions on the dispersion of wages throughout the economy? Which groups of workers tend to benefit the most and the least from unionization (i.e., blue-collar versus white-collar workers, higher- skill versus lower-skill workers, unionized versus non-unionized workers)?
• According to union ideology, wages should not be determined on an individual basis based on th individual worker's productivity. What factors should determine wages? What are the values that underlie most union wage structures?

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Definitions:

Increasing

A term indicating that something is growing or becoming larger in size, number, value, or quality.

Type I Error

The incorrect rejection of a true null hypothesis, also known as a "false positive".

True Null Hypothesis

The hypothesis that there is no effect or no difference, and it truly reflects the reality in the population sampled.

Rejecting

In statistics, it often refers to the act of discarding the null hypothesis based on the evidence of a test.