Some little questions of political social scnence Assignment

Some little questions of political social scnence - Assignment Example If there is inequality between the identical workers, this means that those working in unions are more skilled which increases inequality because these workers are more knowledgeable than the non-union workers. The strong relationship between unions and inequality attracts great interests and analysts struggles to illustrate increase in labor inequality in most industrialized countries. This has been a great challenge in countries that experiences high levels of geographical mobility, with rate of competitive labor markets. Mobility is measured in terms of income earned and the rate of employment. When the low income earners search for new employment opportunities, this increases the level of labor mobility, and on the other hand, when the unemployment rate is high, this increases geographical mobility. Externalities are common aspects in almost every field of economic activity. They are referred as third party effects emanating from the manufacturing of goods and services without any suitable compensation considered. When there is negative production, the marginal social cost exceeds the private marginal cost as illustrated by the diagram below. In other aspects, externalities may result to market failure. In illustrating this, we assume that if a manufacturer is only interested in maximizing profits, then they only account for private costs and private benefits that arise from the product supplies. The diagram below illustrates that the level of profit maximization is at Q1. On the other hand, the social optimum output level is at Q2. Unionization causes a significant change in the market besides its great influence on remunerations and employment. Labor unions prohibit employers from negotiating with employees that are unionized. Registered Unions act as collective bargaining representatives for employees. However, these trade unions may cause labour market failure, since they aim at enhancing the wage rates for the workers.