Globalization and factor returns in competitive markets

Rod Falvey, Udo Kreickemeier

Research output: Chapter in Book/Report/Conference proceedingChapterResearchpeer-review


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.

Original languageEnglish
Title of host publicationInternational Trade and Labor Markets
Subtitle of host publicationWelfare, Inequality, and Unemployment
EditorsUdo Kreickemeier
PublisherWorld Scientific Publishing
Number of pages24
ISBN (Electronic)9789813224919
ISBN (Print)9789813224902
Publication statusPublished - 1 Jan 2017


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