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  • The Upward-Sloping Economy-Wide Wage-Setting (WS) Curve

Factors Causing an Upward Shift in the Wage-Setting Curve

The wage-setting (WS) curve shifts upward in response to any factor that strengthens workers' bargaining position or improves their reservation position. Common causes include increased union power, more generous unemployment benefits, higher costs for employers to dismiss workers, or a withdrawal of bargaining restraint by unions. Although the specific causes may differ, they all lead to the same outcome—upward pressure on wages and prices—because they operate through the common mechanism of enhancing worker leverage in the labor market.

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Gemini AI
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References

Tags

Economics

Economy

Introduction to Macroeconomics Course

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

CORE Econ

Social Science

Empirical Science

Science

Ch.4 Inflation and unemployment - The Economy 2.0 Macroeconomics @ CORE Econ

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