The Annals of Regional Science

, Volume 34, Issue 2, pp 157–172 | Cite as

The impact of international capital mobility on the volatility of labor income

  • R. Scott Hacker


If project risk is positively related to project return, then the greater diversification available from international capital mobility also leads to more investment in the riskier projects with high expected returns. This results in internationally immobile laborers facing greater risk in the demand for their services, since these services are provided to riskier projects and the laborers do not receive the diversification benefit that capitalists do. This paper develops a model which shows that when there is more capital mobility between two countries, there is a tendency for both countries to experience an increase in the volatility of labor income under perfect wage flexibility, and this impact is stronger in the country less richly endowed with labor and financial wealth.


Great Risk Expected Return Labor Income International Capital Capital Mobility 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

Copyright information

© Springer-Verlag Berlin Heidelberg 2000

Authors and Affiliations

  • R. Scott Hacker
    • 1
  1. 1.Jönköping International Business School, 551 11 Jönköping, Sweden (e-mail:

Personalised recommendations