An increase in firms' market power will always result in a higher equilibrium unemployment rate, even if workers' bargaining power decreases at the same time.
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Ch.2 Unemployment, wages, and inequality: Supply-side policies and institutions - The Economy 2.0 Macroeconomics @ CORE Econ
The Economy 2.0 Macroeconomics @ CORE Econ
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Imagine an economy experiences two simultaneous changes: a significant decline in the collective bargaining power of its workforce and a substantial increase in the market power of its largest firms. What is the most plausible combined effect on the economy's real wage level and unemployment rate?
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An increase in firms' market power will always result in a higher equilibrium unemployment rate, even if workers' bargaining power decreases at the same time.
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