Question

Trade has income distribution effects. For example,

suppose that because of a government-negotiated

reduction in trade barriers, trade between Germany and the Czech Republic increases. Germany sells house paint to the Czech Republic. The Czech Republic sells alarm clocks to Germany. Would you expect this pattern of trade to increase or decrease jobs and wages in the paint industry in Germany? The alarm clock industry in Germany? The paint industry in Czech Republic? The

alarm clock industry in Czech Republic? What has to happen for there to be no increase in total unemployment in both countries?

Short answer

Analyzing all trade between Germany and the Czech republic signifies that yes trade has an income distribution effect.

Step-by-step solution

Step 1. Meaning 

Income distribution effect

Effect on individual income by the mean of the distribution of income.

An increase in income increases the quantity demanded when the price is constant.

Step 2. Explanation 

Reduction in trade barrier always give the upper hand to the easy flow of goods and services within the country.

Germany's jobs would increase in the paint industry and related industries due to increases in export leads in increase in quantity demanded.

Jobs in the Czech Republic will increase in the alarm clock and related industry because of the increase in quantity demanded.

Step 3. Explanation 

Czech republic's people will lose jobs in the pain industry because of competition with foreign goods & same goes with Germany that labor of Germany will lose jobs in the alrm clock industry as foreign goods will be exported in the German market.

Step 4. Explanation

No increase in total unemployment means no one loses their jobs there could be some barriers in order to no reduction in the country's unemployment.

if, few people leave their job still international trade is beneficial for any country.