Final answer:
Labor-intensive industries rely on a large number of lower-skilled, lower-paid workers, while high-wage industries require fewer, but more skilled and higher-paid workers. Technological advances and increased labor costs can lead firms to adopt production methods that are less labor-intensive and more capital-intensive, impacting wages and the demand for different types of labor.
Step-by-step explanation:
The main difference between labor-intensive and high-wage production relates to the proportion of labor used and the cost of that labor in the manufacturing process. Labor-intensive industries rely heavily on human labor rather than on automated machinery or sophisticated technology, often because the tasks require manual dexterity or the cost of automation is prohibitively high for the company. These industries often seek out regions with lower costs of living, as the labor in those regions may accept lower wages. An example would be the textile industry. In contrast, high-wage industries often require a smaller, more specialized workforce with higher skill levels, leading to higher pay for workers. High-wage workers like computer programmers may induce local inflation in wages and housing costs due to the increased demand for their skills. For instance, California's Silicon Valley is characterized by high salaries due to the concentration of high-tech companies requiring specialized labor.
When faced with union demands or increased labor costs, firms might opt for more capital-intensive production methods - utilizing more machines and technology and less human labor. This can result in higher labor productivity and may be more cost-effective, especially when workers' wages increase. Shifting production methods can affect the labor market, potentially reducing the demand for low-wage labor and increasing the demand for high-wage labor, especially as new technologies make high-wage labor more productive.