Specialization, Factor Uses and the Rybczynski Theorem

27 Pages Posted: 7 Feb 2006

See all articles by Georg Schaur

Georg Schaur

University of Tennessee, Knoxville - College of Business Administration - Department of Economics

Chong Xiang

Purdue University - Krannert School of Management

Anya Samek

University of California, San Diego (UCSD) - Rady School of Management; Center for Economic and Social Research (CESR)

Date Written: December 2005

Abstract

We show that in the case of multiple goods and factors, the factor proportions theory has the following prediction: across industries, the impacts of the endowment of a given factor on industry outputs have positive co-variance with the relative uses of this factor. The intuition is that on average, the industries that use a given factor heavily have positive output responses following an increase in the endowment of this factor. The co-variation condition accommodates Hicks-neutral factor-augmenting productivity differences across countries. We also show that the predicted positive co-variance finds empirical support. This is evidence that is consistent with the Rybczynski mechanism of the factor proportions theory.

JEL Classification: F1

Suggested Citation

Schaur, Georg and Xiang, Chong and Samek, Anya, Specialization, Factor Uses and the Rybczynski Theorem (December 2005). Available at SSRN: https://ssrn.com/abstract=881075 or http://dx.doi.org/10.2139/ssrn.881075

Georg Schaur

University of Tennessee, Knoxville - College of Business Administration - Department of Economics ( email )

508 Stokely Management Center
Knoxville, TN 37996-0550
United States

Chong Xiang (Contact Author)

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

Anya Samek

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive #0553
Rady School of Management
La Jolla, CA 92093-0553
United States

HOME PAGE: http://anyasamek.com

Center for Economic and Social Research (CESR) ( email )

635 Downey Way
Los Angeles, CA 90089-3332
United States

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