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Globalisation and factor returns in competitive markets

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  • Falvey, Rod
  • Kreickemeier, Udo

Abstract

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.
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Suggested Citation

  • Falvey, Rod & Kreickemeier, Udo, 2005. "Globalisation and factor returns in competitive markets," Journal of International Economics, Elsevier, vol. 66(1), pages 233-248, May.
  • Handle: RePEc:eee:inecon:v:66:y:2005:i:1:p:233-248
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    References listed on IDEAS

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    1. Copeland, Brian R, 1991. "Tourism, Welfare and De-industrialization in a Small Open Economy," Economica, London School of Economics and Political Science, vol. 58(232), pages 515-529, November.
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    3. Charles Blackorby & William Schworm & Anthony Venables, 1993. "Necessary and Sufficient Conditions for Factor Price Equalization," Review of Economic Studies, Oxford University Press, vol. 60(2), pages 413-434.
    4. Falvey, Rod, 1999. "Trade liberalization and factor price convergence," Journal of International Economics, Elsevier, vol. 49(1), pages 195-210, October.
    5. Bond, Eric, 1993. "Trade, factor mobility, and income distribution in a regional model with compensating wage differentials," Regional Science and Urban Economics, Elsevier, vol. 23(1), pages 67-84, March.
    6. Deardorff, Alan V., 1994. "The possibility of factor price equalization, revisited," Journal of International Economics, Elsevier, vol. 36(1-2), pages 167-175, February.
    7. Neary, Peter J., 1989. "Immigration and real wages," Economics Letters, Elsevier, vol. 30(2), pages 171-174, August.
    8. J. Peter Neary, 1985. "International Factor Mobility, Minimum Wage Rates, and Factor-Price Equalization: A Synthesis," The Quarterly Journal of Economics, Oxford University Press, vol. 100(3), pages 551-570.
    9. Deardorff, Alan V, 1980. "The General Validity of the Law of Comparative Advantage," Journal of Political Economy, University of Chicago Press, vol. 88(5), pages 941-957, October.
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    Cited by:

    1. Udo Kreickemeier & Frode Meland, 2017. "Non-Traded Goods, Globalization, and Union Influence," World Scientific Book Chapters,in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 7, pages 173-201 World Scientific Publishing Co. Pte. Ltd..
    2. Li, KW & Pang, Iris A.J. & Ng, Michael C.M., 2007. "Can Performance of Indigenous Factors Influence Growth and Globalisation?"," MPRA Paper 2083, University Library of Munich, Germany.
    3. Udo Kreickemeier & Frode Meland, "undated". "International Trade, Union Wage Premia, and Welfare in General Equilibrium," Discussion Papers 11/05, University of Nottingham, GEP.
    4. Li, Kui-Wai, 2011. "The Optimal Level and Impact of Internal Factors on Growth," MPRA Paper 36419, University Library of Munich, Germany.
    5. Adam Blake & Ziliang Deng & Rod Falvey, 2009. "How does the productivity of foreign direct investment spill over to local firms in Chinese manufacturing?," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 7(2), pages 183-197.
    6. Li, Kui-Wai & Pang, Iris A J & Ng, Michael C M, 2007. "Can Performance of Indigenous Factors Influence Growth and Globalization?," MPRA Paper 35299, University Library of Munich, Germany.

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    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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