International Factor Mobility

1
International Factor Mobility

• 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.

Production Function
2
Pre International Factor Mobility

• Home
• Employment 11
• Production 165
• Real Wage Rate 10
• Real Wages 110
• Real Rent 55

Production Function
3
Pre International Factor Mobility

• Foreign
• Employment 3
• Production 57
• Real Wage Rate 18
• Real Wages 54
• Real Rent 3

Production Function
4
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

5
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

6
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