Assume in a two-country framework (country H and country F), labour allowed to
move across countries without any barrier. Suppose the wage rate in country H is higher
than the wage rate in country F.
Based on the between-country labour movements model, what is your prediction
concerning the pattern of movement of labour between the two countries? Using the
appropriate diagram, discuss the effect of the labour movement on total output, income
for country H and country F, and welfare for capital owners and labour owners in both
countries. What happens to the per capita income for country H and country F.
