More precisely, it suggests that the price of unskilled labour-intensive goods falls in more advanced countries that are assumed to have abundant skilled labour, when these engage in trade with developing countries that are assumed to have abundant unskilled labour. In the more advanced countries, this decline in the price of unskilled labour-intensive goods causes a shift in production towards more skill-intensive goods and a decline in the real w'ages of less educated workers, both in absolute terms and relative to better skilled workers. The latter effect is usually described as an increase in the so-called “skill premium”, which represents a growing gap in wages between skilled and unskilled workers and a worsening of wage disparities.