Decline in Bargaining Power of the Trade Unions (Example)
The power of trade unions to bargain for higher wages for its members, creates wage rigidity and therefore gives rise to classical unemployment. So a decline in the bargaining power of unions will reduce classical unemployment and therefore reduce the NRU. So in your answer to this question, you need to describe what the union does and how it creates classical unemployment, which therefore means that once its power is reduced it will cause a decline in NRU.
Friday, June 6, 2008
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