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bargaining theories- elasticity of demand for labor matter

1. Suppose someone said to you that most bargaining theories are wrong because they assume that the elasticity of demand for labor influences bargaining power. This person claims that the elasticity of demand for labor has no effect on contract outcomes because, in practice, unions ignore the trade-off between wages and employment. What do you think -- does the elasticity of demand for labor matter? Cite empirical evidence that supports your viewpoint.

2. Over the last 30 years union membership as a percentage of the workforce has grown substantially in Canada while declining steadily in the United States. Explain what kinds of data you could collect and how you could use that data to identify the factors that caused this difference in union growth.

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Elasticity of demand for labor:

The elasticity of demand for labor matters because the policy of the cooperation of union management requires that there should be a high consideration for the demand for labor. The elasticity of demand for labor shows the relationship between the quantity and price. These influences are therefore important to the union because it helps in determining the labor amount that is required and the amount of wages that should be paid. The bargaining decisions of the union members depend on the relationship between employment and wage. The changes in the economy is important for the union because it leads to a shift in consumer demand and therefore this shift helps when it comes to negotiations for the increase in wages (Trade union wage policy, 1956).

The strategic positioning of the union workers affects the economic bargaining power for the union members and the importance of wages to the employees. Some ...

Solution Summary

This solution discusses the elasticity of demand for labour, data collection and the difference in union growth in 450 words.