What effects will globalization have on labor demand? What will happen to the wages of U.S. workers as more foreign trade occurs?
What will be an ideal response?
There are two major effects on labor markets: the labor pool effect and the market expansion effect. The labor pool effect does not affect labor demand, but pushes wages downward as workers from other nations compete in the labor market, increasing labor supply. The market expansion effect shifts the labor demand curve to the right as firms find more customers for their products in other countries. This has a positive effect on wages of U.S. workers. Though only one of these effects impacts labor demand, they both impact wages. However, these effects work in opposite directions, so the impact on U.S. wages cannot be determined without more information.
You might also like to view...
Compared to a firm that has many small plants, a firm with a few large plants is likely to have all of the following except which one?
A) greater managerial diseconomies B) less managerial diseconomies C) fewer inputs D) greater availability of specialized capital
Which of the following is true?
a. GDP is a "flow" concept. b. The purchase prices of both intermediate goods and final goods are included in GDP. c. GDP measures economic welfare. d. GDP is a measure of changes in the general level of prices.
If a firm acquires new machines that complement labor
A. there will be no effect on the marginal product of labor curve. B. the amount of labor services hired will decrease. C. the marginal revenue product of labor curve will shift upward. D. the marginal revenue product of labor curve will shift downward.
Suppose gross domestic product (GDP) is $5 billion, government transfer payments are $1.5 billion, indirect business taxes and transfers are $0.25 billion, and depreciation is $0.5 billion. Then national income equals
A. $3.25 billion. B. $2.75 billion. C. $5 billion. D. $4.25 billion.