by trade.

Because trade raises the amount that an economy can produce by letting firms and workers play to their

comparative advantage, trade will also cause the average level of wages in an economy to rise. Workers who

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20.2 • International Trade and Its Effects on Jobs, Wages, and Working Conditions 481

can produce more will be more desirable to employers, which will shift the demand for their labor out to the

right, and increase wages in the labor market. By contrast, barriers to trade will reduce the average level of

wages in an economy.

However, even if trade increases the overall wage level, it will still benefit some workers and hurt others.

Workers in industries that are confronted by competition from imported products may find that demand for

their labor decreases and shifts back to the left, so that their wages decline with a rise in international trade.
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