A criticism of the argument that trade has been an important cause of increased U.S. Wage inequality in recent decades is that, if trade were an important cause, the nontraded Goods industries would have responded to the __________ in the price of skilled labor Relative to unskilled labor by using skilled labor relative to unskilled labor.
A) rise; more
B) rise; less
C) fall; more
D) fall; less

Question

Quizplus · Accepted Answer

If trade were an important cause of increased wage inequality, we would expect the nontraded goods industries to respond to the rise in the price of skilled labor relative to unskilled labor by using less skilled labor and more skilled labor, which would exacerbate wage inequality. Therefore, the answer is B, rise in the use of skilled labor relative to unskilled labor.

A Criticism of the Argument That Trade Has Been an Important