Trade, Jobs, and Wages

Abstract

This chapter focuses on the most frequent argument in favour of limiting trade, which implies that jobs will be saved in industries that compete against imports. It explains how reducing trade saves jobs only by destroying jobs elsewhere in the economy. It analyzes the opponents of free trade that have argued that imports have replaced good, high-wage jobs with bad, low-wage jobs. The chapter contradicts critiques of free trade by arguing that jobs in industries that compete against imports have been largely low-skill, low-wage jobs. It also examines the extent to which trade with developing countries has contributed to the rise in inequality within the United States.