Trade, Jobs, and Wages
Working Paper 4478
There is a broad consensus among US opinion leaders that our economic problem is largely one of failures of international competition -- that trade deficits have eroded our manufacturing base, that inability to sell on world markets has been a major drag on economic growth, and that imports from low-wage countries have caused a widening of income inequality. This paper summarizes recent evidence on these issues, and shows that while there may be a grain of truth to each complaint, in each case the effect is quantitatively minor. The arithmetic of 'competitiveness' just doesn't work.
Paul R. Krugman & Robert Z. Lawrence, 1994. "Trade, Jobs and Wages," Scientific American, vol 270(4), pages 44-49.