Final answer:
Estimating job gains or losses due to free trade agreements is difficult because many gains are not accurately measured, knowledge transfers are challenging to quantify, and economic models may not fully capture the complexity of trade agreements.
Step-by-step explanation:
The difficulty in estimating job gains or losses due to free trade agreements arises from several factors:
- Many gains from trade are not accurately measured in economic statistics. For example, the potential benefits to consumers of having access to a variety of products and increased competition among producers are challenging to quantify.
- Trade between countries often involves a transfer of knowledge in production, technology, management, finance, and law. However, these knowledge transfers are difficult to measure and can have a significant impact on job gains or losses.
- Estimates of gains may be on the low side due to the complexity of trade agreements, such as firms splitting up the value chain of production. This complex process may not be fully captured in economic models and statistics.
Overall, due to these reasons, accurately estimating job gains or losses due to free trade agreements can be a complex task.