Chapter 21: Q. 26 (page 522)
Is international trade likely to have about the same effect on everyone’s wages?
Short Answer
No.
Learning Materials
EXAM TYPES
Features
Discover
Chapter 21: Q. 26 (page 522)
Is international trade likely to have about the same effect on everyone’s wages?
No.
International trade is the exchange of goods and services across the global/international borders. It refers to the free trade across countries.
It accumulates trade wealth and gains, further enhancing the production due to capital accumulation. All of it induces production as a whole, thereby increasing the number of jobs and demand for labor.
As the production demand increases, it shall create demand for labor, thereby creating job opportunities.
But the effect of job creation differs from one industry to another depending on the participation in the international trade. If an industry is associated primarily with exports of its product, the labor demand shall increase and such industries will create more jobs. This leads to an increased demand of labor in that industry, causing the wage rates in such specific industries to go up.
But, if an industry is hit by cheap imports, it won't be able to compete and stay its ground in the market, hence, jobs created would be less or it might even be the case that people loose jobs. In either of the case, the demand of labor falls, thus leading to a fall in wages.
But, industries on a whole benefit from international trade, pushing demand of labor up and hence the average wage rates.
Unlock Step-by-Step Solutions & Ace Your Exams!
Get detailed explanations and key concepts
Al flashcards, explanations, exams and more...
To over 500 millions flashcards
We refund you if you fail your exam.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for freeWhat might account for the dramatic increase in international trade over the past 50 years?
An economic union requires giving up some
political autonomy to succeed. What are some examples of political power countries must give up to be members of an economic union?
Explain how trade barriers raise wages in protected industries by reducing average wages economy-wide.
Why is the national security argument not convincing?
Explain how predatory pricing could be a motivation for dumping.
What do you think about this solution?
We value your feedback to improve our textbook solutions.