Answer to Question #98626 in Macroeconomics for annie

Question

Greece is a country where the wages of the skilled workforce are relatively higher, compared with the wages of skilled workers in Germany and in Germany, the wages of unskilled workers are relatively higher compared with Greece. Assume there is no capital or labor mobility between Germany and Greece. However, Greece and Germany are trading openly. Acoording to these information, Which country will export the goods that require relatively more skilled labor, which willexport the goods that require relatively more unskilled labor?

Answer 1

Since the wages of skilled workers in Germany is relatively lower, than in Greece, Germany is going to export more goods, which require more skilled working hours to produce. Such goods are going to be relatively cheaper in Germany. As a result, their competitiveness will be higher on international markets. In turn, Greece is going to export more goods, which require unskilled work, because of the same reason.