An "international trade" hypothesis has been advanced as an explanation for the widening earnings gap between skilled and unskilled workers in the United States.This hypothesis asserts that,when international trade expands,the domestic demand for skilled labor
A)rises, and the domestic demand for unskilled labor also rises.
B)rises, and the domestic demand for unskilled labor falls.
C)falls, and the domestic demand for unskilled labor rises.
D)falls, and the domestic demand for unskilled labor also falls.

Question

Quizplus · Accepted Answer

According to the international trade hypothesis, when international trade expands, the demand for skilled labor rises while the demand for unskilled labor falls. This is because international trade typically involves the exchange of goods and services that require more advanced technology and higher skill levels, such as computer programming or engineering, while less skilled tasks, such as manufacturing or assembly, are outsourced to countries with lower labor costs. As a result, the wages of skilled workers rise relative to those of unskilled workers, leading to a widening earnings gap between the two groups.

An "International Trade" Hypothesis Has Been Advanced as an Explanation