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Essay / Research Paper Abstract
A 7 page paper discussing unexpected wage movements in international trade. International trade theory says that as international trade increases, the wages of the unskilled labor of developing countries will rise, and to the detriment of the wages of skilled labor in rich countries. Not only has this not been the case in many instances, there are developing nations in which the pattern also has not held. The purpose here is to discuss the applicability of the Stolper-Samuelson Theorem to determine its continued usefulness. Bibliography lists 4 sources.
Page Count:
7 pages (~225 words per page)
File: CC6_KSeconStolpSam.rtf
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Unformatted sample text from the term paper:
trade theory says that as international trade increases, the wages of the unskilled labor of developing countries will rise, and to the detriment of the wages of skilled labor in
rich countries. Not only has this not been the case in many instances, there are developing nations in which the pattern also has not held. The purpose here
is to discuss the applicability of the Stolper-Samuelson Theorem to determine its continued usefulness. The Stolper-Samuelson Theorem
The Stolper-Samuelson Theorem arose from the Heckscher-Ohlin Model of international trade. Heckscher-Ohlin addresses the issue of comparative advantage resulting from differences in factor endowments in different
countries and further in the intensity of those factor across industries. The Stolper-Samuelson Theorem addresses changes associated while comparative advantage is being established. It says that increase in
the relative price of a good increases the real wage of the factor most intensively used in the industry, while lowering the real wage of the other factor.
As this trend progresses through trade, "the return to the scarce factor decreases (because the price of a good which uses the scarce factor intensively
decreases by trade), and the return to the abundant factor increases" (Stolper-Samuelson Theorem). The movement attributable to Stolper-Samuelson is the reason that labor unions in developed countries so often
protest against completely free trade with developing nations. The "explosion of international trade" (Working mans dread, 1994) throughout the decade of the 1990s
and in several years preceding it "linked the labour markets of developed countries to those of developing countries as never before. Some people now claim that competition from cheap third-world
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