January 31, 2009

COLLABORATING WITH THE ENEMIES OF THE ECONOMY:

Summers vs Obama (Greg Mankiw, 1/31/09)

The analysis of Larry Summers:

Another cause of long-term unemployment is unionization. High union wages that exceed the competitive market rate are likely to cause job losses in the unionized sector of the economy. Also, those who lose high-wage union jobs are often reluctant to accept alternative low-wage employment. Between 1970 and 1985, for example, a state with a 20 percent unionization rate, approximately the average for the fifty states and the District of Columbia, experienced an unemployment rate that was 1.2 percentage points higher than that of a hypothetical state that had no unions.

Posted by Orrin Judd at January 31, 2009 10:02 PM
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