Open Economy and the Job Market

This article presents the main elements of the debate concerning the influence of international trade on the job markets in developed countries. First we show the parallel increase in world trade and inequalities between skilled and unskilled workers in developed countries. In addition, international trade theory explains a causal relationship between these two occurrences via the specialization of economies by sector. However, an open economy above all creates inequalities by corporate restructuring to compete in the globalized world: about half of the inequalities in salaries can be justified. Despite the fact that these changes contribute to a sensitive change in labor market functioning, it would be costly to refuse such an opening, and therefore other political options are being discussed. – Summary AFRI-2001