Trade theory suggests that increased trade leads to increased wage inequality.

Question

Quizplus · Accepted Answer

According to the Stolper-Samuelson theorem, increased trade can lead to increased wage inequality as it can cause the price of certain goods to shift, which can have a larger impact on certain sectors and therefore certain types of workers. Additionally, trade can lead to job displacement and changes in the skill requirements of certain industries, which can also contribute to wage inequality.

Trade Theory Suggests That Increased Trade Leads to Increased Wage