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Collective Bargaining

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.

 

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