Transcript International Factor Mobility Labor1357911 Output205790119144165 Marginal Product1917151311 In Home and Foreign there are two factors of production, land and labor, used to produce only one good.

International Factor Mobility
Labor
0
1
2
3
4
5
6
7
8
9
10
11
Output
0
20
39
57
74
90
105
119
132
144
155
165
Marginal
Product
20
19
18
17
16
15
14
13
12
11
10
In Home and Foreign there are two
factors of production, land and labor,
used to produce only one good. The
land supply in each country and the
technology of production are exactly
the same. The marginal product of
labor in each country depends on
employment as shown in the Table.
Initially, there are 11 workers employed
in Home, but only 3 in Foreign. Find
the effects of free movement of labor
from Home to Foreign on employment,
production, real wages, and the income
of land owners in each country.
Pre International Factor Mobility
Home:
• Employment = 11
• Production = 165
• Real Wage Rate = 10
• Real Wages = 110
• Real Rent = 55
Labor
0
1
2
3
4
5
6
7
8
9
10
11
Output
0
20
39
57
74
90
105
119
132
144
155
165
Marginal
Product
20
19
18
17
16
15
14
13
12
11
10
Pre International Factor Mobility
Labor
0
1
2
3
4
5
6
7
8
9
10
11
Output
0
20
39
57
74
90
105
119
132
144
155
165
Marginal
Product
20
19
18
17
16
15
14
13
12
11
10
Foreign:
• Employment = 3
• Production = 57
• Real Wage Rate = 18
• Real Wages = 54
• Real Rent = 3
Post International Factor
Mobility
Home:
• Employment = 7
• Production = 119
• Real Wage Rate = 14
• Real Wages = 98
• Real Rent = 21
Foreign:
• Employment = 7
• Production = 119
• Real Wage Rate = 14
• Real Wages = 98
• Real Rent = 21
Effects of International Factor
Mobility
Home:
• Employment = 11
• Production = 165
• Real Wage Rate = 10
• Real Wages = 110
• Real Rent = 55
Home:
• Employment = 7
• Production = 119
• Real Wage Rate = 14
• Real Wages = 98
• Real Rent = 21
Effects of International Factor
Mobility
Foreign:
• Employment = 3
• Production = 57
• Real Wage Rate = 18
• Real Wages = 54
• Real Rent = 3
Foreign:
• Employment = 7
• Production = 119
• Real Wage Rate = 14
• Real Wages = 98
• Real Rent = 21