Leontief Paradox

The chapter describes Leontief’s observation that labour cannot be measured only in terms of the absolute number of workers but that it is important to look at their competencies, motivation, and skills. This section explains the implications of worker productivity for the labour intensity of an industry.

Wassily Leontief carried out the first test of the Heckscher-Ohlin theorem with statistical data in 1951. Leontief used US data from 1947 onwards. The USA was the most capital-intensive country in the world at that time, so Leontief hoped to find that, according to the Heckscher-Ohlin theorem, the US exported capital-intensive goods and imported labour-intensive goods. The US had relatively much more capital than human resources. The results of Leontief’s test differed from what he had expected and from what the Heckscher-Ohlin theorem should have given.

Ex. 1‑22 Vassilij Leontief’s paradox discovery in the context of other significant events

Keywords: II world war, Vassilij Leontief

Ex. 1‑23 Vassilij Leontief paradox

Keywords: production factors, labour intensity

Share or comment this information on your social media: