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in the heckscher-ohlin model, the wages are equal between industries and the rents between industries are equal. why.

User Meital
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Final answer:

In the Heckscher-Ohlin model, wages and rents equalize across industries due to perfect competition and factor mobility, which allows workers and capital to move freely until equilibrium is reached with no incentive for movement.

Step-by-step explanation:

In the Heckscher-Ohlin model, also known as the H-O model, wage equality across industries is driven by the assumption of perfect competition and factor mobility within a country. According to the model, countries specialize in producing goods for which they have a relative abundance of factors, and as resources flow to where they are most efficiently used, wages for labor and rents for capital would equalize across industries due to competitive forces. Therefore, the H-O model suggests that if two industries require the same factors, the payments to these factors (wages and rents) should equalize because workers and capital can move freely between industries in the pursuit of higher returns. This process occurs until an equilibrium is reached where there is no incentive for labor and capital to move, resulting in equal wages and rents between industries in the long run.

User CappY
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