International Labor Mobility A One-Good Model Without Factor Mobility Assumptions of the model There are two countries(Home and Foreign) There are two factors of production: Land(T)and Labor (L). Both countries produce only one good (refer to it as output”) Both countries have the same technology but different overall land-labor ratios Home is the labor-abundant country and Foreign is the land-abundant country. Perfect competition prevails in all markets Copyright C 2003 Pearson Education, Inc Slide 7-4Copyright © 2003 Pearson Education, Inc. Slide 7-4 ▪ A One-Good Model Without Factor Mobility • Assumptions of the model: – There are two countries (Home and Foreign). – There are two factors of production: Land (T) and Labor (L). – Both countries produce only one good (refer to it as “output”). – Both countries have the same technology but different overall land-labor ratios. – Home is the labor-abundant country and Foreign is the land-abundant country. – Perfect competition prevails in all markets. International Labor Mobility