If capital is specific to manufacturing and land is specific to agriculture, then migration of labor from low-income to high-income countries will cause the wage to:
A) rise in the high-income country and the wage to fall in the low-income country.
B) fall in the high-income country and the wage to rise in the low-income country.
C) rise in both the high-income and low-income countries.
D) fall in both the high-income and low-income countries.

Question

Quizplus · Accepted Answer

When labor migrates from low-income to high-income countries, the supply of labor increases in the high-income country, leading to a potential decrease in wages due to the increased competition for jobs. Conversely, the low-income country experiences a decrease in labor supply, which could lead to an increase in wages due to the reduced competition for jobs.

If Capital Is Specific to Manufacturing and Land Is Specific