THE IMPACT OF ECONOMIC GLOBALIZATION ON THE U.S. LABOR MARKET
Chen, Michaela Muranova
While the overall impact of globalization has been impressive - lifting millions of people out of poverty and providing unprecedented opportunities for people around the world, the benefits have not been shared equally by all. With the rise of emerging economies, the world's balance of power is shifting, causing the U.S. and other developed countries to revisit their policies. Although the U.S. and other Western nations continue to be the wealthiest nations per capita, the emerging economies will soon overtake them as the largest economies overall. In order for the U.S. to continue to enjoy its high standard of living, it will have to remain competitive worldwide and ensure it can fully benefit from its comparative advantage.This thesis focuses on the impact of three specific aspects of economic globalization: trade, foreign direct investment and technological progress on the U.S. labor market. The thesis is structured in a way that provides a comprehensive overview of each of the elements of globalization, its history, economic theory background and analysis of its impact on jobs. Through thorough examination of trade, investment and technological progress, the thesis concludes that while economic globalization can result in some job losses in the U.S., all of the elements also create new jobs. Additionally, these jobs are often better paid jobs than the ones that were eliminated or outsourced abroad.Since job loss and job creation are natural occurrences of the changing dynamics of every economy, one of the problems of long term unemployment lies in the disconnect between a worker's existing skill set and the skills required by the new employer. For the U.S. to attract foreign companies willing to pay premium wages, American workers need appropriate education in order to be able to perform these jobs. Domestic policies, especially in the area of infrastructure investments and tax reform, can provide a further boost to attracting foreign companies and incentivizing domestic companies to expand their operations in the U.S. Lastly, the U.S. needs to benefit from the areas where it has comparative advantage, and therefore, continue to open foreign markets to its products and services and ensure the enforcement of intellectual property rights in foreign markets.
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