I was reading a book that asked this question. "Does trade with low-wage countries depress wage rates in high-wage countries?"Why did they mention specifically low-high wages countries?


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They mention low-high wages countries due to the following common narrative on trade and inequality:

  • Globalization allowed low-wage countries to export more labor intensive goods to high-wage countries.
  • Less skilled workers in those high-wage countries faced import competition and lost their jobs.
  • Bottoming out of the middle class and rise in inequality.
  • Leading to a backlash against globalization.

This common narrative suggests development of low-wage countries has come at the expense of low skilled workers in high-wage countries. This narrative has been investigated in many papers and surely in your book!


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