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Question: Use the Heckscher-Ohlin factor proportions framework with 2-factors, skilled and unskilled labor, to estimate the following arguments. Suppose X is more skill intensive than Y. Suppose the US is more skill abundant than the rest of the world. Explain your answer.

[A] Average wages are higher in the United States exportable sector.
[B] This suggests that there would be benefits to the economy of subsidizing employment in production of exportables (the high average wage sector).
[C] A subsidy for the employment of unskilled labor in the sector with high average wages raises the market wage for unskilled workers.

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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M9309063

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