Why is it difficult to estimate job gains or losses due to free trade agreements?
What will be an ideal response?
It is possible to estimate the number of workers needed to produce a given quantity of exports, and to estimate the number of jobs that would be created if imports were produced at home, but these values are not the same as job creation and destruction due to a trade agreement. Imports may supply a firm with capital or intermediate goods that make the firm more competitive and better able to survive; and exports may supply a firm that previously produced the entire value of its goods at home but after offshoring some production, it exports to its foreign affiliate. Hence, some imports create jobs, while some exports exist only because jobs at home have been moved abroad. Thus it is not really possible to determine the number of jobs that would exist without the free trade agreements, and so there is no real basis for comparison.
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In the endogenous growth model presented in the text, suppose that u represents the fraction of time spent working (as opposed to accumulating human capital), b represents the efficiency of human capital accumulation, H represents the amount of human
capital, and z represents the marginal product of efficiency units of labor. Consumption equals A) buH. B) zuH. C) buz. D) buzH.
A good research question should not be backed by time series data.
Answer the following statement true (T) or false (F)