Beaudry, David N.2011-04-132011-04-132007-10https://hdl.handle.net/10474/1816Version of RecordUsing system dynamics modeling tools, this paper explains the effects of innovations on relative international wages based on two countries. The Heckscher-Ohlin model of international trade is the bases factor-proportions theory. The paper also incorporates related research by Stolper & Samuelson, Vernon, Krugman and Dollar. System Dynamics Modeling is being used to demonstrate of innovation’s effects on wages because this type of modeling permits a visual representation of the cause and effects of innovation on wages in an international trade environment. The paper demonstrates the effects of innovation and technology adoption on relatives wage differential between the countries. It demonstrates the importance of innovation as a tool to maintain wages in a capital-abundant country and the importance of technology adoption in a labor-abundant country.1643560 bytesen-USAuthor retains all ownership rights. Further reproduction in violation of copyright is prohibitedwage modelinginternational tradefactor priceConference Paperapplication/pdf