Two important implications can be inferred from these results. First, trade agreements between under-represented countries around the world, not just regional blocs, should be encouraged to increase the representation of the poorest countries in the international trading network; overcoming the lack of a globalization conundrum would be the key to creating a more balanced network. Second, the tenacity of the Matthew effect suggests that beyond these trade agreements, inequality is a structural property of the network. But other developments are also at work. Economic deregulation, new immigration patterns in the United States, lower minimum wages and diminished union influence have also contributed to the concerns of unskilled and skilled workers. Liberal trade with the world`s emerging countries has certainly contributed to a deterioration in the employment prospects of unskilled workers in the United States. But if we followed the advice of Ross Perot and Patrick Buchanan and built a new trade defence wall, we would not do much to alleviate the plight of less skilled workers. Too many other forces are plotting to bring down their wages. Tags: free trade, trade liberalization, protectionism Even if trade is not responsible for changes in undeserved income or changes in the composition of American households, it could still be an important source of growing wage inequality. Chart 2, based on the annual earnings reports of the Census Bureau`s current population survey, shows that between 1969 and 1993, men`s earnings declined in the bottom 40% of the income distribution, remained unchanged for men in the middle quintile and increased at the top among men.
The different trend in wages increased after 1979. Wages have fallen sharply in low-wage groups and wage gaps between well-paid men and low-paid men have increased. Although overall wage trends have been much healthier for women (black bars in Chart 2), women have experienced increasing income gaps, especially in recent years. After 1979, women`s earnings in the top quintile increased by more than 25%. For low-wage women, the annual wage decreased after 1979. It goes without saying, and unfortunately, in my opinion, telling Americans that their country should become more Swedish is a non-starter. Instead, the ethics of free trade led by the United States are now more threatened than at any time since 1945, because ordinary citizens blame their economic trade problems. At the end of the day, we have to recognize, and I am talking about my experience as a former trade minister in Costa Rica, that trade agreements, especially those that are effective, are difficult to negotiate and difficult to approve in Congress.