International factor flows tend to lower the incomes of those factors in the host country that are close substitutes.

Question

Quizplus · Accepted Answer

International factor flows, such as labor or capital moving across borders, can increase the supply of those factors in the host country. If the incoming factors are close substitutes for domestic factors, this increased supply can lead to lower incomes for the domestic factors due to increased competition.

International Factor Flows Tend to Lower the Incomes of Those