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Costs_of_Globalization__Lesson_16_

Costs_of_Globalization__Lesson_16_ - Winners and Losers All...

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1 Lesson 16 1 Winners and Losers All workers in a Ricardian model benefit from trade Casual observation and empirical evidence suggest that some workers are harmed by trade How can we model the economy so that trade harms some while benefiting others? Lesson 16 2 Simplified version of Ricardo-Viner (specific-factors) model Assume two goods ( X and Y ) Assume two factors of production: -labor that can only be used to produce X ( L X ) -labor that can only be used to produce Y ( L Y ) Lesson 16 3 The full employment conditions LX X X a Q L = LY Y Y a Q L = X X LX L Q a = Y Y LY L Q a =
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