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The outsiders can respond to their status in two ways. Some of them remain unemployed and wait to become insiders to earn high union wage.
The "outsiders" can respond to their status in two ways. Some of them remain unemployed and wait to become insiders to earn high union wage. Others take jobs in firms that are not unionized. Thus, when unions raise wages in one part of the economy, the supply labor in other parts of the economy increases. This increase in labor supply reduces wages in not-unionized industries.
In other words, workers in unions reap the benefit of collective bargaining while not union workers have to bear some of the cost.
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