average wage economy-wide.

5. By raising incomes, trade tends to raise working conditions also, even though those conditions may not

(yet) be equivalent to those in high-income countries.

6. They typically pay more than the next-best alternative. If a Nike firm did not pay workers at least as much

as they would earn, for example, in a subsistence rural lifestyle, they many never come to work for Nike.

7. Since trade barriers raise prices, real incomes fall. The average worker would also earn less.

8. Workers working in other sectors and the protected sector see a decrease in their real wage.

9. If imports can be sold at extremely low prices, domestic firms would have to match those prices to be

competitive. By definition, matching prices would imply selling under cost and, therefore, losing money.

Firms cannot sustain losses forever. When they leave the industry, importers can “take over,” raising
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