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Short Run vs. Long Run Economic Adjustments

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Created October 18, 2025

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🧠 Short Run vs. Long Run: The Key Difference Time Frame What’s Fixed?

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What Can Move? Short run (specific-factors model) Land and capital are fixed in their sectors.

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Labor can move between sectors. Long run (Heckscher–Ohlin model) All factors are mobile — capital

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and labor can move between industries. Both capital and labor adjust until returns equalize.

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⚙️ What happens after immigration in the short run When immigrants arrive:

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The labor supply increases. Wages fall because more workers compete for jobs.

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The returns to fixed factors (capital & land) rise because they are now being used more intensively.

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But that’s a temporary imbalance — because capital and resources are stuck where they are.

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