> The most common example for the Americans reading this is NAFTA, which makes workers in Detroit compete with workers in Mexico (suppressing wages in both location)
I don’t understand how Supply side wage competition would be alleviated by allowing workers to move freely between countries. It seems like it could potentially make it worse for higher wage regions of the world?
It would do exactly that. We run 2 separate immigration systems in the US. One very restrictive system for high paying jobs and one very permissive for low paying jobs. The latter is technically illegal but tolerated. It can't be legal, because then there would be nothing stopping those immigrants from eventually getting the high paying jobs.
This dual system protects the upper class from wage competition while allowing it for the lower classes, ensuring that the upper class benefits both from this protection and also the lowered living expenses provided by cheap labor from the lower classes. All arguments that somehow economic laws don't apply and immigration doesn't lower wages come from members of the upper class who want to preserve this system that benefits them.
I don’t understand how Supply side wage competition would be alleviated by allowing workers to move freely between countries. It seems like it could potentially make it worse for higher wage regions of the world?