	Introduction

The U.S. economy is becoming increasingly open to the world economy. In the process, today's global economy, or what many call globalization, is having a growing impact on the economic futures of American companies, workers, and families. Competition from economic integration is seen as making the U.S. economy more efficient and more productive. Increased economic openness and interdependence may also engender opposition as some groups benefit more than others from globalization, leading some to question whether the global economy is structured to help the few or the many. While the U.S. economy as a whole benefits, some workers, firms, and communities are made worse off. To bolster public support for an open world economy, conventional wisdom suggests that the legitimate concerns of those who are adversely affected by the contemporary economic environment need to be addressed. To what extent adversely affected workers should be helped to adjust to the changes associated with globalization and how, however, is a matter of considerable congressional and public debate. The current wave of globalization, which may be unprecedented in terms of its scale and pace, is supported by three broad trends. The first is technology, which has sharply reduced the cost of communication and transportation that previously divided markets. The second is a dramatic increase in the world supply of labor engaged in international trade. The third is government policies which have reduced barriers to trade and investment. A growing body of research examines whether these trends are combining to create new vulnerabilities for workers. The information technology revolution also facilitates international trade in a wider range of services, from call center operations to sophisticated financial, legal, medical, and engineering services. Not only does this integration increase fears of job loss among workers in rich countries, but it leads to concerns that employers will have to lower their wages and benefits in order to compete. For most Americans, this translated into absolute increases in living standards as measured by gains in real consumption and real disposable incomes. However, these positive developments coincided with changing employment patterns caused by increased foreign competition, a declining wage share of national income, and rising earnings inequality. Whether these trends may be contributing to declining public support for U.S. engagement with the world economy and for additional trade agreements remains to be seen. The trend of rising income inequality is not unique to the United States. A variety of explanations—trade with developing countries, increases in foreign investment flows, an increase in low-skilled immigration, trade and financial liberalization, skill-based technological change, and changes in regulations and institutions—have been put forth to explain these income trends where the relative returns to skilled labor and capital are increasing while the relative returns to unskilled labor are decreasing. Policy Approaches

The relationship between globalization and worker insecurity is complicated and uncertain. As a result, a number of different approaches might be required if ones goal is to maximize American economic well being with the derivative need to bolster public support for globalization and an open global economy. Approaches involving adjustment assistance, education, taxes, and trade are most commonly put forth in this context. A key question may be the extent to which any of these approaches can be designed and implemented in a way that would reduce worker insecurity without undermining the benefits of globalization. In the view of many economists, policies that inhibit the dynamism and flexibility of labor and capital markets or raise barriers to international trade and investment would not be helpful because technology and trade are critical sources of overall economic growth and increases in the U.S. standard of living.
Today's global economy, or what many call globalization, has a growing impact on the economic futures of American companies, workers, and families. Increasing integration with the world economy makes the U.S. and other economies more productive. For most Americans, this has translated into absolute increases in living standards and real disposable incomes. However, while the U.S. economy as a whole benefits from globalization, it is not always a win-win situation for all Americans. Rising trade with low-wage developing countries not only increases concerns of job loss, but it also leads U.S. workers to fear that employers will lower their wages and benefits in order to compete. Globalization facilitated by the information technology revolution expands international trade in a wider range of services, but also subjects an increasing number of U.S. white collar jobs to outsourcing and international competition. Also, globalization may benefit some groups more than others, leading some to wonder whether the global economy is structured to help the few or the many.
The current wave of globalization is supported by three broad trends. The first is technology, which has sharply reduced the cost of communication and transportation that previously divided markets. The second is a dramatic increase in the world supply of labor engaged in international trade. The third is government policies that have reduced barriers to trade and investment. Whether these trends are creating new vulnerabilities for workers is the subject of increasing research and debate.
Some of the vulnerabilities for workers are underlined by changing employment patterns caused by increased foreign competition, weak wage growth, and rising income inequality. These trends, in turn, have become a source of economic insecurity for many Americans and may be weakening public support for U.S. engagement with the world economy.
To bolster public support for an open world economy, the conventional wisdom is that the legitimate concerns of those who are losing in the contemporary economic environment need to be addressed. To what extent the losers should be compensated and how is a matter of considerable congressional and public debate. Because the relationship between globalization and worker insecurity is complicated and uncertain, a number of different approaches may be considered if the goal is to bolster public support for U.S. trade policies, globalization, and an open world economy. Policies involving adjustment assistance, education, tax, and trade are most commonly proposed.
There appears to be a range of views on the merits of each of these policy approaches and the extent to which they can be designed and implemented in a way that would reduce worker insecurity without undermining the benefits of globalization. In the view of many economists, policies that inhibit the dynamism of labor and capital markets or erect barriers to international trade and investment would not be helpful because technology and trade are critical sources of overall economic growth and increase U.S. living standards. At the same time, identifying the most effective policy approach is made difficult by the variety of factors – trade with developing countries, increases in foreign investment flows, trade and financial liberalization, immigration, and skill-based technological change – that may be generating job and income trends that are increasing worker insecurity.