The_Heckscher-Ohlin_Model__Lesson_27_

The_Heckscher-Ohlin_Model__Lesson_27_ - The Trade-Wages...

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1 Lesson 27 1 The Trade-Wages Debate During the 1980s, “the rich got richer while the poor got poorer” Two competing explanations: trade versus technology Lesson 27 2 Real Hourly Wages (1993 Dollars) H.S. Dropout H.S. Grad Some College College Grad 1979 1989 College + 2 or more yrs 10.06 11.23 12.24 15.52 18.80 8.44 10.21 11.82 15.90 20.36 Pct Change -16.1 -9.1 -3.5 2.4 8.3 Lesson 27 3 0 100 200 300 400 500 600 1970 1975 1980 1985 1990 Imports Billions Of $ 212 477
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2 Lesson 27 4 Imports China 0.4 China 10.8 India 0.8 India 3.0 Mexico 3.8 Mexico 18.8 0 5 10 15 20 1979 1989 Billions Of $ Lesson 27 5 Could it be trade? Interpret the two factors of H-O model as skilled and unskilled labor Compared with countries like China, India, and Mexico, U.S. is abundant in skilled labor Lesson 27 6 Apply Stolper-Samuelson Theorem Abundant factor benefits from trade, scarce factor loses Skilled labor benefits, while unskilled labor is harmed
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3 Lesson 27 7 However…. S-S theorem works based on a change in
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This note was uploaded on 09/14/2009 for the course ECON 340 taught by Professor Leidholm during the Summer '08 term at Michigan State University.

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The_Heckscher-Ohlin_Model__Lesson_27_ - The Trade-Wages...

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