MIT11_481Js09_lec08

MIT11_481Js09_lec08 - MIT OpenCourseWare http:/ocw.mit.edu...

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MIT OpenCourseWare http://ocw.mit.edu 11.481J / 1.284J / ESD.192J Analyzing and Accounting for Regional Economic Growth Spring 2009 For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms .
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ASSUMPTIONS: COMPARISON OF FACTOR-MOBILITY AND GOODS-MOBILITY MODELS OVERALL NEOCLASSICAL ASSUMPTIONS PERTAIN 1. PERFECT COMPETITION PREVAILS 2. NO TRANSACTION COST 3. NO TRANSPORTATION COST 4. FACTORS (COMMODITIES) ARE HOMOGENOUS 5. FREEDOM OF ENTRY AND EXIT FACTOR-MOBILITY ASSUMPTIONS 1. SAME TECHNOLOGY AVAILABLE TO ALL COUNTRIES 2. PERFECT FACTOR MOBILITY 3. NO SPECIALIZATION IN TRADE 4. CAPITAL-LABOR RATIOS ARE EQUAL RESULT: Equal factor prices, Equal marginal product of each factor , Equal prices of each commodity. TRADE-MOBILITY ASSUMPTIONS 1. SAME TECHNOLOGY AVAILABLE TO ALL COUNTRIES [NOTE EMPHASIS IS ON “AVAILABLE,” CAN HAVE PRODUCT DIFFERENTIATION. 2. NO FACTOR MOBILITY 3. SPECIALIZATION IN TRADE 4. CAPITAL-LABOR RATIOS ARE UNEVEN (SPECIALIZATION IN A PARTICULAR PRODUCT) RESULT: Equal factor prices, Equal marginal physical product of each factor Equal prices of a given commodity
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HISTORICAL VIEWS OF RESTRUCTURING: FOCUS ON THE DIVISION OF LABOR 1. Segmented labor-market analysts usually deal only with the structure (restructuring) of the labor force, with a few documenting the regional effect, but largely ignoring what simultaneously was happening to the internal organization of the firm. As an exception to this, Harrison (1994) claims that as international competition increases segmented labor markets are becoming more pronounced--a view supported by Tilly and Tilly (1994). Workers within the same firm are differentiated not only in terms of wages, but also in terms of geographical location, with the high-wage core workers located in metropolitan centers and low-wage peripheral workers located in suburban office parks. 2.
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MIT11_481Js09_lec08 - MIT OpenCourseWare http:/ocw.mit.edu...

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