Abstract
ABSTRACT This paper explores the implications of adding wage uncertainty to a two‐region, general equilibrium model of production. In particular, the effects of parametric changes in factor endowments and commodity prices upon regional factor intensities, regional resource allocation, regional outputs, and real factor rewards are delineated. A major role is played by the ranking of stochastic factor intensities measured in value terms as well as by the ranking of deterministic factor intensities measured in physical terms. Only the physical intensity term typically appears in models of this nature; thus, wage uncertainty represents an extension of the traditional model.
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