{
  "id": "98-742",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "98-742",
  "active": false,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 105224,
      "date": "1998-09-02",
      "retrieved": "2016-05-24T20:51:56.011941",
      "title": "Trade with Developing Countries: Effects on U.S. Workers",
      "summary": "Growth in U.S. trade with developing countries is one of the more troubling \"globalization\"\nissues\nand has been part of the debate over passage of fast-track authority, extension of the North American\nFree Trade Agreement (NAFTA), and the Africa trade bill. A central concern for many is whether\nthis trade relationship leads to lost jobs or reduced wages for the U.S. labor force, particularly\nunskilled workers.\n  Over the past three decades, U.S. trade with developing countries has expanded markedly. \nFrom 1987 to 1997, developing-country trade rose 195% (compared to 104% for trade with\ndeveloped countries), increasing its share from 36% to 45% of total U.S. trade. U.S. exports to\ndeveloping countries grew by 243% compared to 135% for developed countries, and imports\nexpanded respectively by 167% and 84%. Imports from developing countries represent only 5% of\nU.S. gross domestic product (GDP).\n  The economic implications of these trends are disturbing precisely because trade theory may\nbe seen to support the prospect that trade with developing countries can hurt unskilled U.S. workers. \nDeveloping countries have a comparative advantage in the production of goods using unskilled labor. \nAccordingly, increased U.S. imports from low-wage countries may lead to a decline in demand for\nunskilled U.S. workers, reducing their wages and contributing to a widening of the differential\nbetween skilled and unskilled manufacturing wages. However, because many assumptions of trade\ntheory are violated in the real world and other factors affect real wages, the effects of trade need to\nbe examined carefully.\n  Economists disagree on the strength of the trade-wage inequality relationship, with estimates\nranging from those that consider trade the primary problem of unskilled workers to those that see\ntrade as virtually blameless, or overwhelmed by other factors, chiefly technological change. Most\nstudies suggest that extreme estimates may be overstating their respective cases and that trade is only\none of many factors affecting inequality. A \"consensus\" of estimates would put developing-country\ntrade responsible for between 10% and 20% of the growth in wage inequality since the 1970s. \nEconomists generally portray this as only a \"modest\" effect, suggesting that most of the inequality\nproblem cannot be explained by trade.\n  Although economists disagree on the effects of trade, they tend to agree on trade policy, arguing\nthat protectionist policies do little to help unskilled workers and come at a very high price to the rest\nof the economy. Alternatives involve helping unskilled workers adjust to trade by upgrading their\nskill levels, helping them transition to higher quality jobs, or perhaps providing some type of\ntransitional income assistance or insurance. In short, whether one is inclined to accept the worst case\nscenario on the effects of developing-country trade on the United States, or dismiss it entirely in\nfavor of technological change as the greatest threat to the American Dream, the consensus solution\namong economists lies with making the work force as competitive as possible in the global economy.",
      "type": "CRS Report",
      "typeId": "REPORTS",
      "active": false,
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      "topics": []
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  ],
  "topics": [
    "Economic Policy",
    "Foreign Affairs",
    "Industry and Trade"
  ]
}