Revealed Preference Tests of the Stolper-Samuelson Theorem

International Trade Journal 2000 Vol. 14 no. 4. p355-375.

36 Pages Posted: 31 Aug 2014 Last revised: 15 Jul 2015

See all articles by Derek Pyne

Derek Pyne

Thompson Rivers University - School of Business and Economics

Date Written: August 15, 2014

Abstract

This paper conducts revealed preference tests of the Stolper-Samuelson theorem. If the Stolper-Samuelson theorem holds, one would expect to find a country’s relatively scarce factor of production (in this case labor) harmed from trade liberalization and thus opposing trade liberalization. The reverse would be true for its relatively abundant factor of production (in this case capital). Therefore, this paper examines representations made before the Canadian House of Commons committee studying the Canadian-United States Free Trade Agreement. Assuming representations coincide with the self-interest of the presenters, the effects of trade liberalization on factor returns are inferred. It finds strong support for the proposition that labor behaves as the Stolper-Samuelson theorem would predict and qualified support for capital behaving as the Stolper Samuelson theorem would predict.

Keywords: Factor returns, Stolper-Samuelson, trade

JEL Classification: F1, D7

Suggested Citation

Pyne, Derek, Revealed Preference Tests of the Stolper-Samuelson Theorem (August 15, 2014). International Trade Journal 2000 Vol. 14 no. 4. p355-375., Available at SSRN: https://ssrn.com/abstract=2481271

Derek Pyne (Contact Author)

Thompson Rivers University - School of Business and Economics ( email )

900 McGill Road
Kamloops, British Columbia V2C 0C8
Canada

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