THE IMPACT OF TRADE ON LABOUR Essay Example | Topics and Well Written Essays - 2250 words

THE IMPACT OF TRADE ON LABOUR - Essay Example Then it has collected some data of international trade volume and unemployment rate of a developing and a developed nation to find out whether any strong relationship does exist between the two variables. On the basis of its research, the study has come to the conclusion that trade does not significantly affect labor market in real world. Introduction: According to the Economic theory, we know that there are gains from trade. But these gains are reflected as net gains. Despite there been a secular increase in both exports and imports and has been regarded as a percentage of Gross National Product which is considered to be beneficial for the economy and also though the increased exports have generated additional employment opportunities, but still these changes have been accompanied by reduced employment opportunities and adjustment burdens for workers in import-competing industries. The workers had to adapt themselves to the new working environment of changing demand conditions in th e import competing industries which involve extended periods of job research, restraining and relocation which demands to be a bit costly venture. As per the analysis, women and the minorities, the less educated and the lower paid groups, as compared to men, had to take more burdens on themselves and they were not in a position to afford the cost even. Since the last two decades, quite a number of developing countries have undergone liberalization of their trade regimes. The proponents of such liberalization have argued that one of the chief beneficiaries of greater openness to trade is the workers in these countries. Basically, trade liberalization with abundant supply of labor has encouraged producers to reallocate output towards labor intensive goods. Hence the resulting increase in the demand for labor, given the labor market conditions, has translated into some condition of an increase in employment and wages. The logic behind this argument has been totally justified and compel ling and has been supported by the proponents of early liberalization as the Newly Industrialized Economies of East Asia like Hong Kong, Korea, Singapore and Taiwan. According to Robbins in the year 1996, and Wood in 1997, recent episodes of trade liberalization have appeared not to have been associated with large improvements in prospects for the typical worker. The apparent divergence between the expectations of liberalization advocates and the recent evidence has been explained by various factors. For example, the liberalization in trade has lead to an inflow of new technologies from abroad. But in this case, the growing evidence suggests that the new technologies are increasingly skill biased and therefore according to the recent episodes of trade liberalization that may lead to an increased demand for workers but that will comprised of less number of workers who are highly skilled, as per Wood in 1997. ( Wood, 1997) On the other way, the available evidence may be incomplete in some important ways. As for example, it has been highly observed that the short run effects of liberalization are likely to be adverse for aggregate labor, even among the proponents of trade liberalization. It takes a lot of time for resources to get reallocated in new firms and industries and it is also possible that the available time series is not enough to capture the effects of trade fully. In a similar way, the number of countries that have been taken into observation may not be the most appropriate ones.