Wage of skilled labor relative to wage of unskilled labor

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Reference no: EM13894146

Consider the following Heckscher-Ohlin model: there are two countries, America and China, two goods, high-tech manufactures and low-tech manufactures, and two factors of production, skilled labor and unskilled labor. America is skilled-labor abundant and China is unskilled-labor abundant. High-tech manufactures are skilled-labor intensive and low-tech manufactures are unskilled-labor intensive.

a. What happens to the price of high-tech manufactures relative to the price of low- tech manufactures in America following trade?

b. What happens to the wage of skilled labor relative to the wage of unskilled labor in America following trade?

Reference no: EM13894146

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