ABSTRACT
This chapter uses economic concepts developed earlier in the text to analyze the labor-market effects of increased trade, in both products and factors of production, with other countries. It explains that expanded trade means that there will be growing export sectors, even in high-wage economies, because international transactions are driven by comparative advantage that is, by the internal opportunity costs of producing goods or services. The chapter analyses the kinds of policies that can minimize the costs of trade-related displacement and spread the benefits of expanded international transactions more widely. It suggests that private employment subsidies are effective than training in speeding the reemployment of workers. Subsidized employment is for the government to become the employer of last resort, directly employing targeted workers to perform public works projects for a period of time. All types of Active Labor Market Policy programs, tended to be less successful in reducing the duration of unemployment in countries that protect workers from being fired.
