Answer to Question #107976 in Macroeconomics for Ali

Question

Q1) I read an article that when a trade war takes place the demand for skilled workers goes down and the demand for unskilled workers goes up , why is that ?
Q2) Who, the 2 countriesin a trade, is most likely to benefit from a trade war between 2 countries ?

Answer 1

1) The demand for unskilled workers goes up because the cost of unskilled labor is relatively low compared to the cost of skilled labor. A majority of countries in trade war focus on production which is largely boosted with the availability of unskilled labor.

2) Protectionism plays a significant role during trade wars. Here, the country with the most unskilled workers will try to discourage exports of its worker by imposing high export tariffs.