Figure 10-3 demonstrates some of the tradeoffs involved when deciding to join a union.
(a) Provide a graph that shows how the presence of union dues affects the decision to join a union. (Assume all workers pay a flat rate for dues.) Show on your graph how the presence of union dues may lead the worker to be less inclined to join the union.(b) Suppose in addition to higher wages the union negotiates a 10 percent employer contribution to a defined contribution pension plan. Provide a graph that incorporates this retirement benefit into the decision of whether to join a union. Show on your graph how additional fringe benefits such as a retirement plan may cause the worker to be more inclined to join the union.