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It has been observed that unions in the capital-intensive steel industry were able to negotiate higher-than-average wage increases during the very period in which steel output in the United States was declining. Using economic theory, how can this pattern be explained?

In Germany, temporary layoffs and dismissals on short notice are often illegal. A dismissal is illegal if it is “sociallyunjustified,” and it is considered “socially unjustified” if the worker could be employed in a different position or establishment of the firm, even one requiring retraining. Workers illegally dismissed may sue their employers. What are the likely consequences of this German law for the ability of German unions to raise wages?


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