Question

Is international trade likely to have about the same effect on everyone’s wages?

Short answer

No.

Step-by-step solution

Step1. Introduction

International trade is the exchange of goods and services across the global/international borders. It refers to the free trade across countries.

It accumulates trade wealth and gains, further enhancing the production due to capital accumulation. All of it induces production as a whole, thereby increasing the number of jobs and demand for labor.

Step2. Explanation

As the production demand increases, it shall create demand for labor, thereby creating job opportunities.

But the effect of job creation differs from one industry to another depending on the participation in the international trade. If an industry is associated primarily with exports of its product, the labor demand shall increase and such industries will create more jobs. This leads to an increased demand of labor in that industry, causing the wage rates in such specific industries to go up.

But, if an industry is hit by cheap imports, it won't be able to compete and stay its ground in the market, hence, jobs created would be less or it might even be the case that people loose jobs. In either of the case, the demand of labor falls, thus leading to a fall in wages.

But, industries on a whole benefit from international trade, pushing demand of labor up and hence the average wage rates.