Question

Does trade between high- and low-income countries lead to the exploitation of work- ers in low-income countries?

Answer 1

Yes it leads to exploitation of workers in low income countries.

This is so because in low income countries a substantial part of workforce is unskilled and also in excess supply. Free trade opens up the opportunities for the unskilled workers to migrate and find work in the developed or high income countries. Due to the excess supply of labor the workers are provided low wages which is usually lesser than the minimum wages, thereby adding to the plight of the workers.

Also, in the capital intensive, developed and high income countries the capital and technology bias against the unskilled labor because of the lack of technical skills and know how. This results in difference in the wages paid to unskilled and skilled labor thereby further harming the poor workers.

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