Economia Politica. Rivista di teoria e analisi Economia Politica. Rivista di teoria e analisi
Non-Technical Abstract
The 2 x 2 Hecksher - Ohlin model is one of the most used approaches in positive trade theory. Its focus is on the differences between countries in their relative factor endowments and on differences between factors' intensities in the production of commodities. There are four main theorems which constitute the heart of this model: the Factor-Price Equalization Theorem, the Stolper- Samuelson Theorem, the Rybzynski Theorem and the Hecksher-Ohlin Theorem. It is well known in the literature that the four theorems do not hold when there is no unique relationship between the goods price ratio and the factors return ratio. This may happen when there is factor intensity reversal, due to different kinds of factor market distortions. The main varieties of distortions analyzed in international trade theory literature can arise:
a) when wages are fully flexible but unequal, for identical factors, between sectors;
b) when wages for identical factors are equal between sectors but inflexible downward;
c) when wages are sticky only in a subset of the sectors in the economy.
In this paper it is taken into account one of the most extensively used specification of the first type of distortions: w2 = aw1 where a is between 0 and 1 and w1(w2) is the wage in the first (second) sector. In the present paper we will concentrate on the former alternative, which has already been extensively used in the literature. More precisely, following the standard hypotheses of the efficiency wage theory, it is underlined in it the role played by non economic factors related to fairness and social norms. Such factors could help to explain why there exist differences in wage setting between countries and why these could contribute to the failure of the Factor-Price Equalization Theorem.
In this paper it is pursued this line of thought and it is introduced a particular version of the fair wage-effort hypothesis of the labour market, as a source of wage differential between sectors, into the Bhagwati - Srinivasan version of the Hecksher-Ohlin model. More precisely, different effort functions in the two sectors will be considered.
The most interesting result concerns the relationship between factor intensity and wage rewards: the main theorems of international trade hold if workers of the capital intensive sector receive higher wages while, if higher wages are received by workers in the labour intensive sector, the theorems do not hold.
ADRIANA BARONE is researcher in economics at the Istituto Universitario Navale di Napoli, Facoltà di Economia, Istituto di Studi Economici, via Medina, 40, 80133 Napoli.
abarone@nava1.uninav.it
CONCETTO PAOLO VINCI is researcher in economics at the Istituto Universitario Orientale di Napoli, Facoltà di Scienze Politiche, Dipartimento di Scienze Sociali, L.go S.Domenico Maggiore (Pal.Giusso), 80134 Napoli.
cpvinci@nava1.uninav.it
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