Trade,Migration, and Inequality in a World without Factor Price Equalization |
| |
| Authors: | Paul Oslington Isaac Towers |
| |
| Affiliation: | 1. School of Business, Australian Catholic University L10, 8 Napier St, North Sydney, NSW 2060 Australia;2. Visiting Fellow, Crawford School of Economics and Government, Australian National University;3. School of Physical, Environmental and Mathematical Sciences, UNSW@ADFA, Canberra ACT 2600 Australia;4. We thank seminar participants at University of New South Wales, Australian National University, Australian Catholic University, and the International Economics Section at Princeton University for helpful comments. |
| |
| Abstract: | The behavior of trading economies in the absence of factor price equalization is not well understood, although empirical evidence against factor price equalization is overwhelming. We map regions of diversification and specialization for competitive world economies with different factor endowment partitions. Goods and factor price responses as economies move within and across different regions of specialization are explored using a series of novel diagrams. The usefulness of endogenizing patterns of specialization is illustrated by considering the impact on inequality of migration flows (such as US–Mexico), the substitutability of trade and migration, and the impact of the entry of a large unskilled labor‐intensive economy (such as China) on factor prices and factor flows. |
| |
| Keywords: | |
|
|
