If the United States is relatively abundant in high-skilled workers and other countries are relatively abundant in low-skilled workers, then high-skilled workers' wages should rise and low-skilled workers' wages should fall in the United States.

Question

Quizplus · Accepted Answer

The theory of comparative advantage suggests that countries specialize in the production of goods and services in which they have a comparative advantage. If the US is relatively abundant in high-skilled workers, then they will have a comparative advantage in producing goods and services that require high-skilled labor. This will increase demand for high-skilled workers and raise their wages. On the other hand, countries that are relatively abundant in low-skilled workers will have a comparative advantage in producing goods and services that require low-skilled workers. This will increase supply of low-skilled labor and decrease their wages.

If the United States Is Relatively Abundant in High-Skilled Workers