Free mobility of capital and Labor force in a two-country model: The dynamic game for growth
| Autor: | Osvaldo Salas, Elvio Accinelli, Laura Policardo, Edgar J. Sánchez Carrera |
|---|---|
| Rok vydání: | 2019 |
| Předmět: |
Statistics and Probability
Labour economics Poverty traps comparative advantages imitative behavior population games Sequential game Poverty traps Applied Mathematics Factors of production Poverty trap imitative behavior Modeling and Simulation Capital (economics) Economics comparative advantages population games Comparative advantage |
| Zdroj: | Journal of Dynamics & Games. :1-16 |
| ISSN: | 2164-6074 |
| DOI: | 10.3934/jdg.2019013 |
| Popis: | In this paper, we consider a two-country and two-sector economy, where firms can choose to be innovative or not innovative, and workers to be skilled or unskilled. Using a dynamic game, we argue that exploiting the comparative advantages a country has in producing goods that use the most abundant factor of production, free mobility of capital and labor is beneficial for economic growth. However, if a country has a comparative advantage in a sector that uses intensely unskilled labor (which is the case of several underdeveloped economies), a poverty trap may arise. For this reason we argue that national Governments must ensure the technological development to improve competitiveness and therefore a social optimal use of the comparative advantages. |
| Databáze: | OpenAIRE |
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