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Trade, Migration, and Inequality in a World without Factor Price Equalization

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  • Paul Oslington
  • Isaac Towers

Abstract

The behavior of trading economies in the absence of factor price equalization is not well understood, although empirical evidence against factor price equalization is overwhelming. We map regions of diversification and specialization for competitive world economies with different factor endowment partitions. Goods and factor price responses as economies move within and across different regions of specialization are explored using a series of novel diagrams. The usefulness of endogenizing patterns of specialization is illustrated by considering the impact on inequality of migration flows (such as US–Mexico), the substitutability of trade and migration, and the impact of the entry of a large unskilled labor‐intensive economy (such as China) on factor prices and factor flows.

Suggested Citation

  • Paul Oslington & Isaac Towers, 2010. "Trade, Migration, and Inequality in a World without Factor Price Equalization," Review of International Economics, Wiley Blackwell, vol. 18(4), pages 650-662, September.
    • Handle: RePEc:bla:reviec:v:18:y:2010:i:4:p:650-662
    DOI: 10.1111/j.1467-9396.2010.00902.x
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    References listed on IDEAS

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    Cited by:

    1. Lorenzo Caliendo, 2010. "On the Dynamics of the Hecksher-Ohlin Theory," Working Papers 2010-011, Becker Friedman Institute for Research In Economics.
    2. Oslington, Paul, 2021. "Free Factor Unemployment," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 74(2), pages 225-244.
    3. Alfred Sitz & Friedrich Sindermann, 2009. "Unemployment and International Trade: The Effects of Minimum Wages and Non-Traded Goods in Models representing Western Industrialized Countries and China (in German)," FIW Working Paper series 024, FIW.

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