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Chapter 20: Q. 6 (page 490)

Do the jobs for workers in low-income countries that involve making products for export to high-income countries typically pay these workers more or less than their next-best alternative?

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01

Step1. Introduction

International trade refers to the exchange of goods and services between countries across the globe. This exchange is referred to as the imports and exports.

02

Step2. Explanation

The jobs for workers in low-income countries that involve making products for export to high-income countries typically pay these workers more (or same) than the next best alternative. This is called as the opportunity cost. It is so because had they not paid them same or more, mostly all labor would rather choose to migrate and shift to that next best alternative than continuing to work here. This act as a way of incentivizing them. Hence, they have to pay them the same or more.

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