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International Trade and the Value of Time

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  • Udayan Roy

Abstract

I discuss a generalized Heckscher–Ohlin–Vanek (HOV) model in which consumption requires time as well as money (as in Becker's theory of the allocation of time) and the amount of work that a worker can do per unit of time—her “ability”—varies from country to country. High ability implies high income per hour, which implies a high value of time and, therefore, high consumption of the good that is more “time‐saving.” Therefore, if domestic production of this good is not commensurately high, it would have to be imported. In this way, I demonstrate that international differences in worker ability constitute an independent source of gains from trade. The model is able to explain several observed features of North–South trade that are not explained by the HOV model. The theoretical possibility of a Leontief paradox‐type trade pattern is also demonstrated.

Suggested Citation

  • Udayan Roy, 2005. "International Trade and the Value of Time," Review of International Economics, Wiley Blackwell, vol. 13(4), pages 757-769, September.
    • Handle: RePEc:bla:reviec:v:13:y:2005:i:4:p:757-769
    DOI: 10.1111/j.1467-9396.2005.00535.x
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    References listed on IDEAS

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    1. Markusen, James R. & Melvin, James R. & Maskus, Keith E. & Kaempfer, William, 1995. "International trade: theory and evidence," MPRA Paper 21989, University Library of Munich, Germany.
    2. Linda Hunter, 1988. "The contribution of nonhomothetic preferences to trade," Working Papers 8809, Federal Reserve Bank of Dallas.
    3. Susan Chun Zhu & Daniel Trefler, 2000. "Beyond the Algebra of Explanation: HOV for the Technology Age," American Economic Review, American Economic Association, vol. 90(2), pages 145-149, May.
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    2. Marjit, Sugata & Das, Gouranga G., 2023. "Immunity-driven Comparative Advantage and its Palliative Effect on Social Health and Inequality: A Theoretical Perspective," GLO Discussion Paper Series 1252, Global Labor Organization (GLO).
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    5. Marjit, Sugata & Yang, Lei, 2020. "An Elementary Theorem on Gains from Virtual Trade," MPRA Paper 104088, University Library of Munich, Germany.

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