Explain Interindustry Wage Differentials and Discuss the Role of Unionization

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The Answer is There are differences in wages across industries,which are known as interindustry wage differentials.For instance,workers in different industries such as mining,construction,manufacturing,and services earn different wages on average.There are a variety of factors that could explain the wage differentials among different industries.Unionization is considered as one of the important factors of interindustry differentials.On average,highly unionized industries tend to pay higher wages than do nonunion industries.Most highly unionized industries such as manufacturing,construction,and mining are capital intensive therefore,requires employees to learn and use complex production technology.However,we should also consider the fact that unions' influence has been declining since 1980s.In order to promote job security,many unions focus more on promoting job security than securing large pay increases (known as concessionary bargaining).For instance,the union that represents the pilots of Delta Airlines agreed to substantial cuts in base pay and in future retirement income to help the company avoid dissolution.Substantial cuts like the one in this example was very unlikely before the 1980s.

Explain Interindustry Wage Differentials and Discuss the Role of Unionization

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