Theoretically, Does the Outsourcing of Labor to Low-Wage Countries Lead

question 194

Multiple Choice

Theoretically, does the outsourcing of labor to low-wage countries lead to long-term exploitation of labor?

• A) Yes, because the profit motive is moving jobs to where owners can pay as little as possible for labor, causing hardship to workers who lose jobs when production is moved abroad. It is unfair for domestic workers to be fired.
• B) Yes, because the profit motive means that companies who outsource will pay progressively lower wages to the same workers abroad, threatening to fire them if they do not accept lower wages. The labor market will support this drop in equilibrium wage in countries where outsourcing brings jobs.
• C) No, because the increasing demand for labor in high-wage countries will enhance the well-being of workers there as well as in the low-wage countries.
• D) No, because as the demand for labor rises in low-wage countries due to outsourcing, wages in these countries will gradually rise.

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