Critics of offshoring often asset that if offshoring is proh

Critics of offshoring often asset that if offshoring is prohibited the relative wages of the workers in the offshoring nation will not decline. But what might then occur that will still lower workers’ relative wages?

Solution

Let us say that offshoring is prohibited. In such a case, there will be workers that will be laid off from offshoring units. The overall supply of labor in the market will increase. In such a case, it is expected that the relative wages of the workers will fall as they will have little negotiation power. In addition, the population growth also plays a big role. With an increase in population growth, the labor supply also increases which again may imply a lower relative wage for these workers.