Argumentative Research Paper Unemployment Due To International Trade

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International Trade
Introduction
The association between international trade, employment, income and also the value of the currency had always been controversial. Most economists have stressed the efficient-enhancing results of international trade with no effect on total employment, devaluation of currency and also the uneven distribution of income in the long term (Aradhyula, Rahman & Seenivasan 2). Policy makers and government in contrast, typically assert that due to international trade, employment has increased primarily due to the number of jobs created by the increase in exports.
The public, however, has highlighted that international trade endangers employment opportunities for workers at all levels, leads to significant inequality in income and also the devaluation of currency for most nations (Mohler, Weder & Wyss 2). The paper will analyze the problems of increased unemployment uneven distribution of income and the devaluation of currency as a result of international trade. It will also provide suitable recommendations for handling these issues for a country’s economy to thrive.
Analysis
International trade is highly essential, especially in the allocation of resources in the economy and not in the creation of additional employment opportunities. International trade between various nations is a vital aspect of raising the living standards of its citizens, providing employment and also allowing consumers to enjoy a wide variety of commodities. International trade in recent years has become highly essential with a larger share of the Gross Development Product (GDP) mainly devoted to imports and exports. Global trade, however, increases unemployment rates due to the decrease in the demand for low-skilled labor in a country that is high on labor capital (Mohler, Weder & Wyss 12). If the induced value of low-skilled labor cannot be safeguarded by the systems of a nation’s economy, lack of job opportunities for employees with low technical skills will rise due to international trade.
Unemployment due to international trade
The results of international trade in a country’s labor market are a huge issue for most countries. In nations with a homogeneous economy and perfect competition on products and labor markets, these issues are easily manageable (De Pinto 5-32). However, due to globalization and the existence of various economic structures with imperfect competition, wage and employment consequences have become tremendous.
Carrère (3) stated that global trade leads to the worker-selection effect whereby most enterprises within a specific country place high demands on workers with high skill-sets compared to those employees with limited skills. Workers with low technical abilities do not meet the rise in quality requirements and eventually, they become jobless (De Pinto 5-32). Workers with high technical abilities benefit from global trade through an increase in their salaries and alternative job opportunities.
Due to international trade, high wage workers experience a massive reduction in their earnings and employment compared to low wage earners. However, for highly skilled workers, such issues are typically voluntarily since they can seek other better employment opportunities elsewhere (Belenkiy & Riker 19). As for low-income employees, they generally are affected by mass layoffs especially when an international trade does not favor their employers. Low-wage workers typically stay over in their initial trade-exposed enterprises and industries and incur greater issues due to massive layoffs even after moving on from their previous place of employment.
Through global trade, a country with a high productive employer-employee matching has a comparative advantage in the labor sector, even when affected by diseconomies of scale that leads to high turnover rates for other enterprises (Belenkiy & Riker 19). A country generally exports goods from a sector with the lowest expected period of unemployment, since the workforce requires lower wages to induce them in searching for job opportunities within that sector.
Belenkiy & Riker (19) stated that a relatively-skilled abundant country, international trade increases the relative prices of the skill-intensive commodities. This decreases the rate of unemployment of skilled workers, however; it increases the unemployment rate of unskilled workers. International trade also significantly affects the equilibrium unemployment rate (Belenkiy & Riker 19). Liberalization of trade typically reallocates resources towards more productive businesses that screen more intensively for highly skilled job applicants.
Lower trade impediments result into elevated levels of unemployment for nations that take part in the global trade. This occurs due to the lack of trade restrictions that promote the profitability and value of exporting enterprises which also leads to an expansion of the export industry. Unemployment increases when workers reallocate towards the exporting industry, especially of this sector that is primarily characterized by labor market frictions (Kim 19). Higher trade exposure in a country’s economy is associated with higher levels of equilibrium unemployment in the import and export industries. This is caused by the destruction of job opportunities for employees seeking positions in a small, low-productivity firm since these firms lack the capabilities of competing with large high-productivity firms (Kim 19). Such firms control the labor markets by limiting the job requirements necessary for employment.
Employment protection legislation created by policymakers is some of the frameworks that have elevated the costs of wages at the lower end of the wage distribution market. Such policies affect the costs of labor, and therefore, imports from low-income economies are expected to be more likely to lead to higher unemployment (Kim 19). This is due to the lack of resources for low-income economies to sustain employment for their low-skilled laborers.
Low trade barriers also increase unemployment, especially in a country with more dynamic labor markets. However, it potentially reduces unemployment in that economy due to highly dynamic labor markets. Unemployment increases in a highly flexible country as workers are reallocated towards an expanding economic sector whereby labor market frictions are known to be higher (Belenkiy & Riker 20). This is also apparent for a nation with a rigid labor market. Additionally, in a nation with a rigid labor market, the trading sector in that country contracts instead of expanding, as trade increases. This only leads to lower unemployment rates as workers are reallocated towards non-trading industries which have no labor market frictions.
International trade significantly reduces the number of employment opportunities for people, but it also affects the wages of that specific nation. Trade elevates the amount that an economy can produce through allowing firms and employees to play to their comparative advantage (Textbook Equity Edition 690). Additionally, global trade will also cause the average wage levels in an economy to rise. Workers with high rates of productivity become more desirable to their employers, which alters the demand for their labor and also an elevation of their salaries in the labor market. In contrast, impediments to trade decrease the average wage levels in an economy.
Even if trade elevates the overall wage bracket, it does not benefit all employees. Workers in sectors that are challenged by competition from critical commodities may find that demand for their labor decreases tremendously which results in a huge decline in their wages with an increase in global trade (Mohler, Weder & Wyss 11). Alternatively, employees in sectors that benefit from exports in foreign markets find that the need for their skill-sets shifts positively which is a positive aspect of international trade. This raises the wages of the workers within a specific nation.
Uneven distribution of income due to international trade
Aradhyula, Rahman & Seenivasan (2) indicated that the effect of global trade on the level of distribution income had been discussed among researchers and regulators in various sectors in developing countries. It is mainly emphasized that international trade leads to the creation of a competitive environment which consequently, leads to the development of quality commodities that facilitate economic innovation. One of the main purposes of globalization is the provision of a high-quality standard of life on a global scale through reaping and utilizing the benefits of international trade. This trade leads to the provision of a proper framework for the reduction of poverty and also the development of economies in various nations (Aradhyula, Rahman & Seenivasan 3). However, the anti-globalization demonstrations and processions are typical during World Trade Organization proceedings indicate that there are significant issues associated with international trade.
International trade has a negative impact on people of the low-income bracket especially if the benefits of trade on the gap continuously widens between low earning too high middle-income employees. This is mainly due to the access to new technologies that favor highly skilled and educated workers rather than unskilled laborers (Aradhyula, Rahman & Seenivasan 3). However, inequality might decline in developing nations due to an increase in demand for unskilled labor facilitated by international trade.
International trade is vital, but not a sustainable practice, especially...