国际经济学Chapter 3

CHAPTER 3

Specific Factors and Income Distribution

* The failures of the Ricardian model

·A n extreme degree of specialization.

·W ithout effects on the income distribution.

( because it supposes labor is the only factor )

* There are two main reasons why international trade has strong effects on the distribution of income.

·S hort-term: specific factor, chapter3.

·L ong-term: relative abundance and relative intensity, chapter4.

(resource endowment theory or factor proportions theory ). * What is a specific factor?

Specific factor: --- can be used only in the particular sector. Mobile factor: --- can move between sectors.

·Think of factor specificity as a matter of time.

·Labor is less specific than most kinds of capital.

§1. The Specific Factors Model

1.Assumptions of the model : 2×3×

2.

·America and Japan;

·Labor (L)、Capital (K)、Terrain (T) ;

mobile factor specific factor

Q M=Q M(K,L M)、Q F=Q F(T,L F)、L=L M+L F

·Manufacture and Food.

2.Production possibilities

·Production of manufactures and food is determined by the allocation of labor.

Figure 3-3

·Because of diminishing returns, PP is a bowed-out curve instead of a straight line.

·The slope of PP, which measures the opportunity cost of manufacture in terms of food is =MPL F/MPL M.

dQ F/dQ M=(dQ F/dL)/(dQ M/dL)=－MPL F /MPL M=－1/MPL M* MPL F;

(MPL F↑/ MPL M↓)↑

3.Prices, wages, and labor allocation

·The demand for labor: MPL M*P M=W M , MPL F*P F=W F ·The allocation of labor: W M=W F , L=L M+L F

Figure3—4

、P F L M、L F Q M、Q F

P

·The production of specific factor model

MPL M*P M=MPL F*P F MPL F/MPL M=P M/P F

(opportunity cost=relative price)

Figure 3-5

4.The distribution of income within the manufacturing sector

Figure 3-2

total income: Q M=∫L

MPL M*dL M

wages: (W/P M)*L M

income of capitalists: ∫L MPL M*dL M (W/P M)*L M

·What happens to the allocation of labor and the distribution of income when P M and P F change? ( Figure3-6. 3-7. 3-8 )

①Notice that any price change can be broken into two parts : an equal proportional change in P M and P F , and a change in only one price.

Eg: P M↑M↑10% + P M↑7%

P F↑P F↑10%

② A equal proportional change in price have no real effects on the real wage, real income of capital owner and land owner.

Figure 3-6

③ A change in relative price

Figure 3-7

·Wage rate rise less than the increase in P M.

·Labor shifts from the food sector to the manufacturing sector and

Q M rises while Q F falls.

Figure 3-8 P M/P F↑