Consider the (‘long run’) effects of inward labor migration in the Heckscher-Ohlin Model. Assume that the country trades and the relative price of two goods X and Y stays constant. Assume X is relatively labor intensive.Intuitively explain how the increase in labor supply affects (relative) output of X and Y and how it affects factor prices (‘Rybczynski Theorem’).You may want to use graphs.

Consider the (‘long run’) effects of inward labor migration in the Heckscher-Ohlin Model. Assume that the country trades and the relative price of two goods X and Y stays constant. Assume X is relatively labor intensive.Intuitively explain how the increase in labor supply affects (relative) output of X and Y and how it affects factor prices (‘Rybczynski Theorem’).You may want to use graphs.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.6P

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