Which of the following is a reason why the union wage gap might underestimate the actual effect unions have on wages?
A. Unions typically attract the most productive workers to the application pool.
B. The union wage gap can be overestimated but never underestimated.
C. Nonunion firms may pay higher wages in order to prevent its workers from unionizing.
D. Nonunion jobs will have excess labor available to them because firms will restrict entry into union jobs, and competition for this excess labor competes down the observed nonunion wage.
E. Unions target high-paying firms.
Answer: C
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