Final answer:
Trade barriers protect specific industries from competition, potentially raising wages in those sectors. However, these measures decrease overall economic efficiency, ultimately reducing average wages economy-wide. International trade can impact working conditions in low-income countries in both positive and adverse ways.
Step-by-step explanation:
Trade barriers can save jobs in protected industries because they limit competition from foreign companies. This can lead to higher wages within those protected industries as there is less pressure to keep wages low to compete on an international scale. Conversely, trade barriers reduce the overall efficiency of the economy by preventing firms and workers from specializing according to their comparative advantage. This means that, while some jobs are saved in industries shielded from competition, other industries may lose jobs as a result of higher production costs and retaliation from trade partners.
When we look specifically at how trade barriers raise wages in protected industries while reducing average wages economy-wide, it is because these barriers shift resources towards industries that the country may not have a comparative advantage in. This inefficiency leads to higher costs of goods and services, which can have a cascading effect on the economy, leading to a reduction in average wages. Moreover, trade barriers can harm consumers by increasing prices and limiting choices.
International trade can improve working conditions in low-income countries as companies may import higher labor standards along with capital and technology. However, it can also lead to a 'race to the bottom' where countries compete by allowing poor working conditions to keep costs low. Thus, while international trade has the potential to raise worker standards, its effect is intricately linked to domestic policies and international labor standards.