Globalization and wages for unskilled labor (PL)

Wednesday, February 29, 2012

Globalization and wages for unskilled labor (PL)


		DC		LDC
		A	B	C	D
		Result	Market impact	Result	Market impact
1	Trade	Production shifts to...		Production shifts to...
2	Labor migration	Labor flows... IN	SL shifts right
3	Capital migration	Capital flows...		Capital flows...

For each of the three consequences of globalization listed above:
    Step 1: Choose from the following to complete columns A and C.
        Row 1: Trade: "labor-intensive goods" or "capital-intensive goods"?
        Row 2: Labor migration: "in" or "out"?
        Row 3: Capital migration: "in" or "out"?
    Step 2: For columns B and D, indicated which curve shifts and which direction it goes.
    Step 3: Draw an arrow in the county's labor market illustrating each conclusion under step 2 (just arrows, not new curves)

Choose which of the following answers is consistent with the basic analysis of markets and the global economy:
1.	For a DC, increased globalization with an LDC tends to make wages for the DC's unskilled labor
	(1) rise, (2) fall, (3) remain the same, or (4) move in an uncertain direction.
2.	For an LDC, increased globalization with a DC tends to make wages for the LDC's unskilled labor
	(1) rise, (2) fall, (3) remain the same, or (4) move in an uncertain direction.