Question

Explain the paradox that establishing a union can increase both wages and employment, but once the union is established it must trade off increases in one for the other.

Answer 1

Answer :-

At the point when a union is built up, at that point it does collective bargaining for the benefit of the workers who are related with the union. It causes increase in the wage of workers just as assurance to the workers in term of their firings from the finish of employers.

In this way, it is however that union is additionally going to ensure, the business status of the workers.

In any case, increase in wage rates, increase the wage bill and it increases the expense toward the finish of employers. Presently, employer needs to counterbalance the expense, by demanding less workers.

In this way, it increases the unemployment. Thus, increase in wage lead to increase in unemployment and union needs to make s tradeoff between how much ascent in wages and what number of laborer s to be utilized with the goal that an equalization is made. Here, union likewise neutralizes those workers who are not the individual from the union and work to make those as unemployed first by the organizations. In this way, it is a further increase in unemployment in the market.