According to the Rybczynski theorem, how will immigration of unskilled labor from Mexico to the United States affect the Mexican economy?
A) Mexico's production of capital-intensive products will decrease.
B) Mexico's production of labor-intensive products will decrease.
C) Wages of Mexican workers will increase.
D) Wages of Mexican workers will decrease.

Question

Quizplus · Accepted Answer

The Rybczynski theorem suggests that when a country experiences an increase in the availability of a factor of production (such as unskilled labor), it will increase its production of the good that uses that factor intensively (in this case, labor-intensive products) and decrease production of the good that uses the other factor (capital-intensive products). Therefore, if unskilled labor is immigrating from Mexico to the US, Mexico's production of labor-intensive products will decrease. The theorem does not directly address the effect on wages in the Mexican economy.

According to the Rybczynski Theorem, How Will Immigration of Unskilled