Suppose there is a tradeable goods market (such as products like textiles that can be shipped across markets) and a non-tradable goods market (such as services like hair cuts). Can outsourcing impact wages in the non-tradable market?
What will be an ideal response?
Yes. The non-tradable good cannot itself be outsourced -- hair cuts have to be sold in the market where demanders are and can't be undertaken in some other country across the globe. But textiles can be outsourced. We would then see wages in the textile industry fall in the high wage country and rise in the low wage country. But within the country, there are now pressures for workers to switch sectors -- so long as wage differences (adjusted for productivity) differ across the non-tradable and tradable sectors. Thus, textile workers whose wages have fallen because of outsourcing will switch to hair dressing in the high wage country -- thus extending the downward pressure on wages to the non-tradable sector. Similarly, hairdressers in the low wage countries (whose wages are unaffected by the outsourcing itself) now find themselves earning less than textile workers and would therefore switch -- extending the upward pressure on wages to the hair dresser markets in the low wage country.
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A) $37,000. B) $45,000. C) $10,000. D) $50,000.
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The demand for firewood is likely to be more elastic in the summer than in the winter
a. True b. False
No particular stock is a better buy than any other stock if
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