The stolpersamuelson theorem is one of the most cited theorems in economics. There is little empirical research on whether balassasamuelson effects can. Paul samuelson s contributions to trade theory and international economics are simply breathtaking. Huw edwards imf, washington and csgr, university of warwick csgr working paper no 9602 may 2002 abstract in this paper we investigate the powerful implications of the stolpersamuelson theorem. The original stolpersamuelson theorem was derived under very speci. Samuelson 2004 pdf samuelson is professor of economics and institute professor emeritus. The stolpersamuelson theorem is one of the central results of heckscherohlin theory q. Using household employment surveys and production data from mexicos national institute of geography. Can the stolpersamuelson theorem explain relative wage. Evidence from mexico raymond robertson department of economics macalester college st. The stolpersamuelson theorem when the labor market structure. The magnification effect for prices is a generalization of the stolper samuelson theorem. Likewise, an increase in the price of the laborintensive good increases wage and reduces rent. Virtually every undergraduate or graduate student, anywhere in the world, will be asked to understand his stolpersamuelson and factorprice equalization theorems.
The stolpersamuelson theorem states that an increase in the prices of the labourintensive good raises real labour incomes and reduces real returns to capital. Given the factor intensity assumption, an increase in relative price of good c leads to increase in relative price of t, and viceversa. The relevance of the stolper samuelson theorem to the trade and wages debate lisandro abrego and t. The stolpersamuelson theorem prepared for encyclopedia of world trade since 1450, ed. Example 530 problems 534 bibliography 536 18 general equilibrium ii. Stolper samuelson theorem within the heckscherohlin framework. The stolpersamuelson theorem sst simply suggests that, in any particular country, a rise in the relative producer prices of the labour intensive good will make labour better off and capital worseoff, and viceversa, provided that some amount of each good is being produced. Suppose in addition that the importcompeting sector is relatively laborintensive, meaning that it uses a higher ratio of labor to capital. Suppose that one sector produces exports and the other produces goods which compete directly with imports. The period experienced a series of dramatic termsoftrade shocks as trade costs and political barriers to trade fell, even as technological change in many of the countries lagged behind see. Meeting 4 stolper samuelson theorem international economics. The relevance of the stolpersamuelson theorem to the. By applying the stolpersamuelson theorem, a result in trade theory that links relative goods prices and relative wages, this paper tests whether changes in relative prices of femaleintensive goods can explain changes in female relative wages.
The stolper samuelson theorem is one of the most cited theorems in economics. The stolper samuelson theorem demonstrates how changes in output prices affect the prices of the factors when positive production and zero economic profit are maintained in each industry. Populism and the economics of globalization dani rodrik. Economic and cultural sources of preferences for globalization in egypt. The stolpersamuelson theorem is a basic theorem in heckscherohlin trade theory. Lecture 2 winners and losers from international trade from last time immiserizing growth rybczynski theorem winners and losers within a country stolpersamuelson theorem factor price equalization theorem trade and income inequality leontief paradox trade and jobs trade and technology. The stolper samuelson theorem rachel mcculloch april 2005 this essay is a contribution to michael szenberg, ed. Institute for the study of social change, university college dub. Stolpersamuelson theorem a change in the price of a good results in a more than proportional change in the same direction of the price of the factor used intensively in its production. Does the stolpersamuelson theorem hold with less trade. It describes the relationship between relative prices of output and relative factor rewardsspecifically, real wages and real returns to capital. Can the stolpersamuelson theorem explain relative wage movements. Consider an ho economy in which there are two countries united states and france, two goods wine and cheese, and two factors. The stolpersamuelson theorem shows there is a negative relationship between changes in the price of an output and changes in the price of the factor not used intensively in producing that product.
The general version of the stolpersamuelson ss theorem states that free trade benefits the factor used relatively. By developing a new theory of trade policy, this paper represents a development in the theory of social con ict and franchise extension because the prior literature has tended to focus on a closed economy setting. An increase in the price of the capitalintensive good increases the return to capital and decreases the return to the other factor labor. In celebration of the fiftieth anniversary of the stolper samuelson theorem, this volume collects in one place the original stolper samuelson articles as well as the most significant later contributions that interpret, extend, and test the basic result. The stolpersamuelson theorem when the labor market structure matters a. Chapter in nber book globalization and poverty 2007, ann harrison, editor p. The stolpersamuelson theorem moving from no trade to free trade raises the returns to the factor used intensively in the risingprice industry, and lowers the. Stolpersamuelson theoremi theorem stolpersamuelson theorem. Mexican labor gains with trade, and landowners lose. The stolpersamuelson theorem rachel mcculloch april 2005 this essay is a contribution to michael szenberg, ed. Rybczynskis diagram and the stolpersamuelson theorem. An extended salterswan model is employed to verify if the stolpersamuelson theorem holds and the consequences in terms of prices, production and resources allocation. It is useful in analyzing the effects on factor income, either when countries move from autarky to free trade or when tariffs or other government regulations.
Paul samuelsons contributions to international economics. Rising wage inequality and increasing international trade have renewed interest in the empirical relevance of the stolpersamuelson. The stolper samuelson theorem shows there is a positive relationship between changes in the price of an output and changes in the price of the factor used intensively in producing that product. The stolpersamuelson theorem when the labor market structure matters. The stolpersamuelson theorem in models with economies of.
Heckscher ohlin vanek theorem an excess supply approach1. Let f l waf l pf, the share of labour in food sector f t raf t pf, the share of capital in food sector c l wac l pc, the share of labour in cloth. An agentbased simulation of the stolpersamuelson effect. Factor price equalization and stolpersamuelson theorem. This paper examines the effects of agricultural trade policy changes in the brazilian agriculture using cge model.
Feb 06, 2004 the stolper samuelson theorem prepared for encyclopedia of world trade since 1450, ed. Theorem 1 heckscherohlin a country will export the good that intensively uses its relatively abundant factor of production as well as the ho theorem, there are a number of other key results that go with it. Results show that the stolpersamuelson hypothesis is reversed when imports and domestic goods. What is the effect of trade on the gender wage gap in the. The stolpersamuelson theorem is a special case of the magnification effect when one of the endowments is held fixed. The relevance of the stolpersamuelson theorem to the trade. Economic and cultural sources of preferences for globalization in egypt amaney a. It is common knowledge in the literature on the hos heckscherohlin samuelson trade model that sst only applies when countries are diversified. Peter neary university college dublin and cepr february 6, 2004 correspondence to. But there is one stolpersamuelsonlike result that is extremely general, and which can be stated as follows.
The stolpersamuelson theorem demonstrates how changes in output prices affect the prices of the factors when positive production and zero economic profit are maintained in each industry. In his famous 1955 article, rybczynski used the familiar production box diagram in order to prove, correctly, the theorem that bears his name. In celebration of the fiftieth anniversary of the stolpersamuelson theorem, this volume collects in one place the original stolpersamuelson articles as well as the most significant later contributions that interpret, extend, and test the basic result. The stolpersamuelson theorem the stolpersamuelson theorem is one of the central results of heckscherohlin theory q. Virtually every undergraduate or graduate student, anywhere in the world, will be asked to understand his stolper samuelson and factorprice equalization theorems. The third in our series looks at the stolpersamuelson theorem.
Hence the frequent policy advice to developing countries to expand labour intensive nontraditional exports. Chad bown and gary chamberlain provided helpful comments. Equally prevalent abroad is its counterpart that european industry. Protection and real wages introduction second only in political appeal to the argument that tariffs increase employment is the popular notion that the standard of living of the american worker must be protected against the ruinous competition of cheap foreign labour. Paul samuelsons contributions to trade theory and international economics are simply breathtaking. However, the construction he used also suggests that the dual theorem, the stolper samuelson theorem, is incorrect. Huw edwards imf, washington and csgr, university of warwick csgr working paper no 9602 may 2002 abstract in this paper we investigate the powerful implications of the stolper samuelson theorem. Given the factor intensity assumption, an increase in relative price of c leads to increase in relative price of t, and viceversa. On the occasion of its fiftieth anniversary in 1991, a golden jubilee volume was published, containing the original article, many well known extensions of it and another 12 new papers reflecting on aspects of the theorem deardorff and stern, 1994. Oct 04, 2017 meeting 4 stolper samuelson theorem international economics 1. The stolper samuelson theorem is a special case of the magnification effect when one of the endowments is held fixed. It is a logical relation that existed before there were humans and will survive them, just as surely as the theorem of pythagoras. There is little empirical research on whether balassa samuelson effects can. The theorem developed by these two writers, called as stopler samuelson theorem, rests upon the following main assumptions.
The stolper samuelson theorem shows there is a negative relationship between changes in the price of an output and changes in the price of the factor. The magnification effect for prices is a generalization of the stolpersamuelson theorem. The stolper samuelson theorem moving from no trade to free trade raises the returns to the factor used intensively in the risingprice industry, and lowers the. Mp l xwp x mp k xrp x mp l ywp y mp k yrp y if the marginal products change, the real returns will change. Trade leads to an increase in the return to a countrys abundant factor and a fall in the return to its scarce factor. So argentine landowners gain with trade, and labor loses.
The stolpersamuelson theorem in its original setting can be explained intuitively as follows. It provides a definite answer to a central question in applied economics. Here in this paper our objective is to test the heckscher ohlin vanek. The stolpersamuelson theorem when the labor market. Lecture 2 winners and losers from international trade from last time immiserizing growth rybczynski theorem winners and losers within a country stolper samuelson theorem factor price equalization theorem trade and income inequality leontief paradox trade and jobs trade and technology. These theorems tell us, of course, why trade liberalization tends to benefit the. It is common knowledge in the literature on the hos heckscherohlinsamuelson trade model that sst only applies when countries are diversified. Continuation of chapter 4 3 effect of trade on factor prices. However, the construction he used also suggests that the dual theorem, the stolpersamuelson theorem, is incorrect. The heckscher ohlin samuelson theorem ppt presentation summary.
Tr ade leads to an increase in the return to a countrys abundant factor ie capital and skilled labor in the usa and a fall in the return to its scarce factor ie unskilled labor in the usa. Our framework is closely related to this seminal 1. Lecture 2 winners and losers from international trade. Ho approachthe theorem of stolper and samuelson 1941as the core analytical framework of international economists for modeling the distributional effects of trade. Baixe no formato pdf, txt ou leia online no scribd. The stolper samuelson theorem the stolper samuelson theorem is one of the central results of heckscherohlin theory q. The stolper samuelson theorem sst simply suggests that, in any particular country, a rise in the relative producer prices of the labour intensive good will make labour better off and capital worseoff, and viceversa, provided that some amount of each good is being produced. Pdf an agentbased simulation of the stolpersamuelson. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext.
Meeting 4 stolper samuelson theorem international economics 1. The theorem intends to show that the change in commodity prices change the distribution of real incomes between capital and labor from pro. Stolper samuelson theoremi theorem stolper samuelson theorem. When combined with the heckscherohlin theorem, stolpersamuelson implies. The stolpersamuelson theorem university of michigan press. The relevance of the stolpersamuelson theorem to the trade and wages debate lisandro abrego and t.
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