| Factor Price Equalization |
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| pricing | |
| international economics | |
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An often-cited example of factor price equalization is s. When two countries enter a Free Trade agreement, wages for identical jobs in both countries tend to approach each other. After NAFTA was signed, for instance, unskilled labor wages gradually fell in the United States , at the same time as they gradually rose in Mexico . The same force has applied more recently to the various countries of the European Union . The result was first proven mathematically as an outcome of the Heckscher-Ohlin Model assumptions. SEE ALSO |
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