Unions & Wages

Unions may try to use their collective bargaining power to get higher wages for members

For this to be effective then the union needs to have a degree of control over the labour force and therefore the total labour supply

The extent to which unions can impact wages depends on:

The level of unemployment & Competition

If demand for labour is elastic then unions can force wages higher but quantity demanded will decrease

If demand for labour is inelastic than unions will be more effective at rising wage levels

Many markets that have unions have more elastic demand for labour therefore unions have less influence on wage rates