The Impact of Globalization on Income and employment Flashcards
some effects of globalization includes
employment opportunities at various levels of education, imported goods became cheaper
Impact of globalization
affecting price of goods, job patterns, and wages as growth and employment start to diverge
Distributional effects on the US economy
growing disparities in US economy, with highly educated workers enjoying more opportunities and workers with less education facing declining employment
Non-tradable sector of US economy
produces goods and services that must be consumed domestically
The tradeable sector of US economy
sector that produces goods and services that can be consumed anywhere, such as manufactured products, engineering, and consulting services.
Added value
the difference between the value of its outputs, that are goods and services it produces and the cost of inputs, such as raw materials and energy it consumes
Non tradable sector vs tradable sector
experienced rapid employment growth and value-added. Tradeable sector, where employment levels barely increased.
Contributions to income rose in the tradable sector
rising productivity gains and the movement of lower-income jobs to other countries.
overall conclusion about employment in both sectors
Employment and incomes are high and rising for highly educated people at the upper end of the tradable sector but diminish at the lower end, where people are less educated.
As emerging countries continue to move up the value-added chain,
Tradable sectors of advanced economies will require less labor and the more labor-intensive tasks will be moved to emerging economies.
what is the cause of US employment challenge?
technology
Benefits of MNCs
have generated growth and jobs in developing countries, which have increased competitiveness and increased growth in advanced economies like the US.
Public (employment) and private (profit) interests
In advanced countries, companies have little incentive to invest in technologies that save on labor or increase the competitiveness of labor-intensive value-added activities.
Proposal to keep manufacturing industries
combination of productivity-enhancing technology and competitive wage levels
factors hindering the non-tradable sector from improving
pressure on the government budget at all levels, rising health care costs, fragile housing market, effort to curb excess consumption and boost savings, risk of a second economic downturn (unemployment rises).
