In Home and Foreign there are two factors of production, land and labor, used to pro- duce

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In Home and Foreign there are two factors of production, land and labor, used to pro- duce 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 follows: Number of Workers Employed Marginal Product of Last Worker 20 2 19 3 18 4 17 5 16 6 15 7 14 8 13 9 12 10 10 Initially, there are 11 workers employed in Home, but only 3 workers in Foreign. Find the effect of free movement of labor from Home to Foreign on employment, production, real wages, and the income of landowners in each country.

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International Economics Theory & Policy

ISBN: 9780138002121

8th Edition

Authors: Paul R Krugman, Maurice Obstfeld

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