What is the specific factors model in economics?
The specific factor model is designed to demonstrate the effects of trade in an economy in which one factor of production is specific to an industry. The specific factor model assumes that an economy produces two goods using two factors of production, capital and labor, in a perfectly competitive market.
When we use the specific-factors model to study immigration we assume that?
When we use the specific-factors model to study immigration, we assume that: Land and capital are immobile internationally but labor is internationally mobile.
How will immigration affect the marginal products and returns to factors of production in the long run?
In the long run (the HO model), immigration will lead to: an increase in the wage and a decrease in the return to capital in the receiving country. Returns to labor and returns to capital will both increase. Both relative and absolute returns to factors of production will not change.
Which is the best approach to analyzing migration in the long run quizlet?
In order to analyze migration in the long run, it is appropriate to use: the Heckscher-Ohlin model with free movement of labor across borders.
How is the specific factor model used in economics?
The specific factor model is used to demonstrate the effects of economic changes on labor allocation, output levels and factor returns. Many types of economic changes can be considered including a movement to free trade, the implementation of a tariff or quota, growth of the labor or capital endowment, or technological changes.
Who is the creator of the specific factor model?
It can result in a fall in return from Y-specific capital. This variant of specific factor model was developed by Paul Samuelson and Ronald W. Jones. This model involves two commodities, two countries and three factors along with the neo-classical production function.
What is the specific factor of production of good 2?
Production of Good 2 requires labor and capital specific to Industry 2. There is a fixed endowment of sector-specific capital in each industry as well as a fixed endowment of labor. Full employment of labor is assumed, which implies that the sum of the labor used in each industry equals the labor endowment.
Which is the mobile factor in the specific factor model?
Labor is the mobile factor, and there are two specific factors, K and T. In this sense, Jones calls it a 2-good, 3-factor model. We do not use L to denote land because it is reserved for labor, and the lower case l looks like “one.”