International Factor Movements

I. Introduction

A. Labour and capital movements

B. Incidence has increased over time.

C. Examine effects for a small open economy (SOE)

II. Short-Run Effects

A. Brief Review of Specific-Factors Model

B. Consider movement of the non-specific factor from the ROW

to H

(i). Effect on real factor prices

(ii). Effect on outputs

(iii). Two case studies

Figure 5.3 Wages in Europe and the New WorldFeenstra and Taylor: International Economics, First EditionCopyright © 2008 by Worth Publishers

.

(iv). Welfare effects

Table 5.5 Gains from ImmigrationFeenstra and Taylor: International Economics, First EditionCopyright © 2008 by Worth Publishers

C. Consider movement of a specific factor from the ROW to H

(i). Effects on real factor prices

.

.

(ii). Effect on Outputs

(iii). Effect on Welfare

D. Long-Run Effects

(i). Brief Review of Heckscher-Ohlin(-Samuelson) Model

(ii). Effect on real factor prices

(iii). Effect on Outputs

.

(iv). Effect on Welfare

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