Scale Economies in Factor Supplies, International Trade, and Migration

Abstract

This paper incorporates externalities generated by human capital into the Heckscher-Ohlin-Samuelson framework to examine the patterns of international trade and migration. Individuals endowed with different levels of human capital choose to become either unskilled or skilled workers. National scale economies with respect to human capital play an important role in endogenously determining these factor supplies and yield a number of interesting patterns of trade and migration. Migration could reinforce comparative advantage. Both skilled and unskilled workers could migrate in the same direction.

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