The standard competitive trade model, extended to include many goods and factors, is used to analyze the effect of goods and factor market integration on average international disparities in the real returns of internationally immobile factors. It is shown that goods market integration decreases international real return differentials for all factors. We derive sufficient conditions for this result to hold for the subgroup of internationally immobile factors as well. While there is a presumption for similar results to hold with international factor market integration, we show that this is true for international migration but in general not for international investment.
|Title of host publication||International Trade and Labor Markets|
|Subtitle of host publication||Welfare, Inequality, and Unemployment|
|Publisher||World Scientific Publishing|
|Number of pages||24|
|Publication status||Published - 1 Jan 2017|