Daily Archives: June 3, 2008

Has trade worsened the wage inequality in US?

There has long been an arguement that since US’ trade with poor countries like China has increased, demand for domestic low skill jobs has reduced. This is because imports from poor countries displace goods produced in US by the low skilled workers. In effect the wage gap between the skilled and unskilled workers has gone up and trade is obviously to be blamed for that.

The evidence is at best mixed. This article in The Economist gives a good summary of what economists have to say on the issue.

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Filed under current economic issues