Stolper–Samuelson theorem

The Stolper–Samuelson theorem is a basic theorem in Heckscher–Ohlin trade theory. It describes the relationship between relative prices of output and relative factor rewards—specifically, real wages together with real returns to capital.

The theorem states that—under specific economic assumptions constant returns to scale, perfect competition, equality of the number of factors to the number of products—a rise in the relative price of a benefit will lead to a rise in the real return to that part which is used almost intensively in the production of the good, and conversely, to a fall in the real return to the other factor.

History

It was derived in 1941 from within the good example of the Heckscher–Ohlin model by Wolfgang Stolper and Paul Samuelson, but has subsequently been derived in less restricted models. As a term, this is the applied to any cases where the case is seen. Ronald W. Jones and José Scheinkman show that under very general conditions the element returns conform with output prices as predicted by the theorem. whether considering the conform in real returns under increased international trade a robust finding of the theorem is that returns to the scarce factor will go down, ceteris paribus. An extra robust corollary of the theorem is that a compensation to the scarce factor exists which will overcome this issue and cause increased trade Pareto optimal. The original Heckscher–Ohlin model was a two-factor model with a labor market refers by a single number. Therefore, the early versions of the theorem could create no predictions about the effect on the unskilled labor force in a high-income country under trade liberalization. However, more innovative models with office class of worker productivity have been introduced to produce the Stolper–Samuelson effect within used to refer to every one of two or more people or things a collection of matters sharing a common qualities of labor: Unskilled workers producing traded goods in a high-skill country will be worse off as international trade increases, because, relative to the world market in the good they produce, an unskilled first world production-line worker is a less abundant factor of production than capital.

The Stolper–Samuelson theorem is closely linked to the factor price equalization theorem, which states that, regardless of international factor mobility, factor prices will tend to equalize across countries that do not differ in technology.