Factor Intensity Versus Factor Substitution in a Specified General Equilibrium Model
TLDR
In this article, the sensitivity of the comparative static elasticities of a general equilibrium model of production to factor intensity and factor substitution was examined, and it was shown that factor intensity influences the comparative statics more than factor substitution.Abstract:
This paper examines the sensitivity of the comparative static elasticities of a general equilibrium model of production to factor intensity and factor substitution. A model of the US economy is specified with three factors and two goods. Changing factor endowments have consistently inelastic effects on factor prices. Prices of goods, however, have elastic effects on factor prices, and factor endowments have elastic effects on outputs. Factor intensity influences the comparative statics more than factor substitution. Under a move toward free trade characterized by a falling price of manufactures relative to services, the wage of unskilled labor falls while the wage of skilled labor and the price of capital rise.read more
Citations
More filters
Posted Content
Trade, Technology snd Labour Markets: General Equilibrium Perspectives
Abstract: This paper summarizes the state of the debate on the effects of "globalization" and spontaneous technical change on wages and, in this context, describes the results from a recent study of the links between trade, technical change and labor market behavior These new results show that comparatively minor generalization of the standard Heckscher-Ohlin-Samuelson model of trading countries substantially moderates the Stolper-Samuelson factor reward changes stemming from trade refonn in part for this reason, results from a global general equilibrium analysis suggest that the direct effects of increased openness are a comparatively minor explanator of the observed shifts in labor demand and that skilled-labor-using technical change would appear most important Of course, part of that technical change may itself be in response to international competition Any protectionist response against developing countries, driven by concerns about wage inequality or unemployment, is shown to be counteroductive
Journal ArticleDOI
Capital investment and employment in the information sector
TL;DR: In this paper, the authors measure the employment effects of changes in capital investment in the U.S. information sector by econometrically estimating an employment multiplier from historical data.
Journal ArticleDOI
Morocco and the US Free Trade Agreement: A specific factors model with unemployment and energy imports
Mostafa Malki,Henry Thompson +1 more
TL;DR: In this article, the authors examined the impact in Morocco of its pending free trade agreement with the US in a specific factors model with unemployment and energy imports, and the model predicts substantial adjustments for reasonable price scenarios.
Journal ArticleDOI
FTAA and Colombia: Income redistribution across labor groups
Henry Thompson,Hugo Toledo +1 more
TL;DR: In this paper, a specific-factors model of production with seven skilled groups of labor is applied using projected price changes for the three major sectors of the economy, and every labor group, except production labor, is projected to lose.
References
More filters
A Three-Factor Model in Theory, Trade and History
TL;DR: In this article, Bhagwati et al. discuss the trade, balance of payments and growth in the Indian economy, and the impact of trade on economic growth. But they do not discuss the role of trade in economic development.
Journal ArticleDOI
The Relevance of the Two-Sector Production Model in Trade Theory
TL;DR: This article examined how well the basic properties of the traditional 2 × 2 model of a competitive economy, commonly used in much of the pure theory of international trade, generalize when more goods and factors are considered.
Journal ArticleDOI
Factor intensities and factor substitution in general equilibrium
Ronald W. Jones,Stephen Easton +1 more
TL;DR: In this paper, the authors examine how factor intensity rankings between industries and the economywide asymmetry in the degree of factor substitution combine to influence the manner in which changes in relative commodity prices affect the factoral distribution of income.
Journal ArticleDOI
Some theorems of trade and general equilibrium with many goods and factors
TL;DR: In this article, the Stolper-Samuelson matrix, the Rybczynski matrix, and the matrix which measures the effect of a change in factor endowments upon factor rewards at constant commodity prices were derived.