Adam Smith (1776) devoted the first three chapters to the division of labor in his Inquiry into the Nature and Causes of the Wealth of Nations. This process, carried far enough, eventually results in a divergence between the distributions of supplies and demands of such...

An economy's production set is the collection of all net output vectors that the economy is capable of producing with a given technology and fixed quantities of primary factors of production. The boundary of this set is called the production possibility frontier or PPF. We show that, if the...

We introduce international labor mobility in a three-sector general equilibrium model with rural-urban migration. We demonstrate that under some reasonable conditions an inflow of foreign skilled labor (capital) can reduce skilled-unskilled wage inequality.