This figure illustrates the analysis of union−nonunion wage differentials. Unions increase wages in their sectors by restricting entry into union jobs. Assuming the markets for unionized and nonunionized jobs begin at equilibrium, at point e in both panels, union and nonunion wages are initially W₀. If the union successfully restricts supply to S₁ in panel A, union wages will rise to W₁, but employment will fall to L₁ (point a). Those workers released will have no choice but to move to the nonunion sector represented in panel B, thus increasing its supply to S₂. Equilibrium in the nonunion sector thus moves to point b, where more workers (L₂) are employed at a lower wage (W₂). The result is a wage differential equal to W₁ − W₂.