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Moreover, the costs of saving jobs through protectionism can be very high. A number of different studies have attempted to estimate the cost to consumers in higher prices per job saved through protectionism. [link] shows a sample of results, compiled by economists at the Federal Reserve Bank of Dallas. Saving a job through protectionism typically costs much more than the actual worker’s salary. For example, a study published in 2002 compiled evidence that using protectionism to save an average job in the textile and apparel industry would cost $199,000 per job saved. In other words, those workers could have been paid $100,000 per year to be unemployed and the cost would only be half of what it is to keep them working in the textile and apparel industry. This result is not unique to textiles and apparel.

(Source: Federal Reserve Bank of Dallas)
Cost to u.s. consumers of saving a job through protectionism
Industry Protected with Import Tariffs or Quotas Annual Cost per Job Saved
Sugar $826,000
Polyethylene resins $812,000
Dairy products $685,000
Frozen concentrated orange juice $635,000
Ball bearings $603,000
Machine tools $479,000
Women’s handbags $263,000
Glassware $247,000
Apparel and textiles $199,000
Rubber footwear $168,000
Women’s nonathletic footwear $139,000

Why does it cost so much to save jobs through protectionism? The basic reason is that not all of the extra money paid by consumers because of tariffs or quotas goes to save jobs. For example, if tariffs are imposed on steel imports so that buyers of steel pay a higher price, U.S. steel companies earn greater profits, buy more equipment, pay bigger bonuses to managers, give pay raises to existing employees—and also avoid firing some additional workers. Only part of the higher price of protected steel goes toward saving jobs. Also, when an industry is protected, the economy as a whole loses the benefits of playing to its comparative advantage—in other words, producing what it is best at. So, part of the higher price that consumers pay for protected goods is lost economic efficiency, which can be measured as another deadweight loss, like that discussed in Labor and Financial Markets .

There’s a bumper sticker that speaks to the threat some U.S. workers feel from imported products: “Buy American—Save U.S. Jobs.” If the car were being driven by an economist, the sticker might declare: “Block Imports—Save Jobs for Some Americans, Lose Jobs for Other Americans, and Also Pay High Prices.”

Trade and wages

Even if trade does not reduce the number of jobs, it could affect wages. Here, it is important to separate issues about the average level of wages from issues about whether the wages of certain workers may be helped or hurt by trade.

Because trade raises the amount that an economy can produce by letting firms and workers play to their comparative advantage, trade will also cause the average level of wages in an economy to rise. Workers who can produce more will be more desirable to employers, which will shift the demand for their labor out to the right, and increase wages in the labor market. By contrast, barriers to trade will reduce the average level of wages in an economy.

Questions & Answers

fishing is which type of industry
Jaismeen Reply
what influence the shift in demand unli rice ban?
Sherryl Reply
who is consider as a father of modren micro economic
Maqdoor Reply
what is tot ?
Priyanka Reply
disadvantages of a free economy
Henry
what's economic
kamal Reply
Management of money such as saving.
babu
study of how society manage it's scare resources
Maulik
Please help me how to compute national income. what are those included on national income like for an example in W= WAGE what included in wage ?
love Reply
what is competitive market?
Shantal Reply
a compataive market is when there are many producers competating to provide consumers with a goods and services needed
Tanveer
in a compitative market no single producer or consumer can dictate the market
Tanveer
where many buyer and many seller interact for particular good or service, all buyers and sellers have negligible affect on market price.
Maulik
Like an oligopoly, it may cause deflation sometimes.
babu
types of demand elasticity
Farouq Reply
What is price elasticity of demand and its degrees. also explain factors determing price elasticity of demand?
Yutansh Reply
Price elasticity of demand (PED) is use to measure the degree of responsiveness of Quantity demanded for a given change on price of the good itself, certis paribus. The formula for PED = percentage change in quantity demanded/ percentage change in price of good A
GOH
its is necessarily negative due to the inverse relationship between price and Quantity demanded. since PED carries a negative sign most of the time, we will usually the absolute value of PED by dropping the negative sign.
GOH
PED > 1 means that the demand of the good is price elasticity and for a given increase in price there will be a more then proportionate decrease in quantity demanded.
GOH
PED < 1 means that the demand of the good is price inelasticity and for a given increase in price there will be a less then proportionate decrease in quantity demanded.
GOH
The factors that affects PES are: Avaliablilty of close substitutes, proportion of income spent on the good, Degree of necessity, Addiction and Time.
GOH
Calculate price elasticity of demand and comment on the shape of the demand curve of a good ,when its price rises by 20 percentage, quantity demanded falls from 150 units to 120 units.
Helen Reply
5 %fall in price of good x leads to a 10 % rise in its quantity demanded. A 20 % rise in price of good y leads to do a 10 % fall in its quantity demanded. calculate price elasticity of demand of good x and good y. Out of the two goods which one is more elastic.
Helen
what is labor
Grace Reply
labor is any physical or mental effort that helps in the production of goods and services
Kwabena
what is profit maximizing level of out put for above hypothetical firm TC = Q3 - 21Q2 + 600 + 1800 P = 600 MC = 3Q2 - 42Q + 600
Sosna Reply
consider two goods X and Y. When the price of Y changes from 10 to 20. The quantity demanded of X changes from 40 to 35. Calculate cross elasticity of demand for X.
Sosna
sorry it the mistake answer it is question
Sosna
consider two goods X and Y. When the price of Y changes from 10 to 20. The quantity demanded of X changes from 40 to 35. Calculate cross elasticity of demand for X.
Sosna
The formula for calculation income elasticity of demand is the percent change in quantity demanded divided by the percent change in income.
Sosna
what is labor productivity
Lizzy Reply
if the demand function is q=25-4p+p² 1.find elasticity of demand at the point p=5?
Puja Reply
what are some of the difference between monopoly and perfect competition market
Obeng Reply
n a perfectly competitive market, price equals marginal cost and firms earn an economic profit of zero. In a monopoly, the price is set above marginal cost and the firm earns a positive economic profit. Perfect competition produces an equilibrium in which the price and quantity of a good is economic
Naima

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Source:  OpenStax, Principles of economics. OpenStax CNX. Sep 19, 2014 Download for free at http://legacy.cnx.org/content/col11613/1.11
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