International Factor Mobility

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Presentation transcript:

International Factor Mobility In Home and Foreign there are two factors of production, land and labor, used to produce only one good. The land supply in each country and the technology of production are exactly the same. The marginal product of labor in each country depends on employment as shown in the Table. Initially, there are 11 workers employed in Home, but only 3 in Foreign. Find the effects of free movement of labor from Home to Foreign on employment, production, real wages, and the income of land owners in each country. Production Function

Pre International Factor Mobility Home: Employment = 11 Production = 165 Real Wage Rate = 10 Real Wages = 110 Real Rent = 55 Production Function

Pre International Factor Mobility Foreign: Employment = 3 Production = 57 Real Wage Rate = 18 Real Wages = 54 Real Rent = 3 Production Function

Post International Factor Mobility Home: Employment = 7 Production = 119 Real Wage Rate = 14 Real Wages = 98 Real Rent = 21 Foreign: Employment = 7 Production = 119 Real Wage Rate = 14 Real Wages = 98 Real Rent = 21

Effects of International Factor Mobility Home: Employment = 11 Production = 165 Real Wage Rate = 10 Real Wages = 110 Real Rent = 55 Home: Employment = 7 Production = 119 Real Wage Rate = 14 Real Wages = 98 Real Rent = 21

Effects of International Factor Mobility Foreign: Employment = 3 Production = 57 Real Wage Rate = 18 Real Wages = 54 Real Rent = 3 Foreign: Employment = 7 Production = 119 Real Wage Rate = 14 Real Wages = 98 Real Rent = 21

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