Which of the following is a reason why the union wage gap might underestimate the actual effect unions have on wages?
A) Unions typically attract the most productive workers to the application pool.
B) Nonunion firms may pay higher wages in order to prevent its workers from unionizing.
C) Nonunion jobs will have excess labor available to them because firms will restrict entry into union jobs, and competition for this excess labor competes down the observed nonunion wage.
D) Unions target high-paying firms.
E) The union wage gap can be overestimated but never underestimated.

Question

Quizplus · Accepted Answer

Nonunion firms may pay higher wages to deter unionization, which can narrow the observed wage gap between union and nonunion workers, thus underestimating the union's impact on wages.

Which of the Following Is a Reason Why the Union