Consider the 2 good, 2 country, 2 factor Heckscher-Ohlin model. Slovenia is a small open economy. Slovenia has two factors (land and labor). Slovenia produces two goods: a land intensive good (food) and a labor intensive good (shoes). Suppose the free movement of people within the EU sees a net inflow of labor into Slovenia (the supply of land remains unchanged). Suppose also that the world relative prices for food and shoes remain unchanged.

Question:The labor intensity of food production rises.

True or False?