Chapter

Policy Options for the North

Adrian Wood

in North-South Trade, Employment and Inequality

Published in print July 1995 | ISBN: 9780198290155
Published online November 2003 | e-ISBN: 9780191597015 | DOI: http://dx.doi.org/10.1093/0198290152.003.0010

Series: IDS Development Studies

 Policy Options for the North

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Expansion of trade with the South has, on average, benefited people in the North, but has hurt unskilled workers, who should be assisted by government action. Protection against Southern imports would be the most costly solution, for both North and South. In principle, the best policy is to expand the skilled labour supply by improvements in education and training, but there is less scope for doing so than is usually recognized, and the benefits would emerge only slowly. Action is thus needed also on the demand side, but in different ways in different countries. In America, the best approach would be to combine better education, greater public employment of unskilled workers, and income supplements for low‐wage workers. In Europe, to better education should be added policies to raise the relative demand for unskilled workers, for example, through the introduction of a progressive payroll tax.

Keywords: demand; education; employment; labour; policy; protection; supply; tax; trade; training

Chapter.  21529 words.  Illustrated.

Subjects: International Economics

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