Variable labour supply and the pure theory of international trade : An empirical note |
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Authors: | John P Martin |
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Institution: | Organization for Economic Cooperation and Development, 75775 Paris, France Trinity College, Dublin, Ireland |
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Abstract: | Previous writers have shown that variable labour supply may lead to perverse price output responses in the two-sector Heckscher-Ohlin model. This note attempts to assess the empirical likelihood, as opposed to the theoretical possibility, of such perversities. Using a range of plausible parameter values, we conclude that cases of a perverse price-output response consistent with dynamic stability of the model, though theoretically possible, are unlikely to arise in practice. |
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