The Heterogeneous Effects of Trade across Occupations: A Test of the Stolper-Samuelson Theorem

RePEc Short ID: pba1078
ORCID iD: 0000-0002-0044-4897

Basco, Sergi; Liégey, Maxime; Mestieri, Martí; Smagghue, Gabriel

doi:10.21033/wp-2020-24

Working Paper

The Heterogeneous Effects of Trade across Occupations: A Test of the Stolper-Samuelson Theorem

Abstract: This paper develops and implements a novel test of the Stolper-Samuelson theorem. We use nationally-representative matched employer-employee panel data from 1997 through 2015 to study the effect of the rise in China’s exports on French worker earnings. Our version of the Stolper-Samuelson theorem states that there is a negative correlation between occupation exposure to Chinese competition and change in worker earnings. First, we document substantial heterogeneity in trade adjustment across occupations. Then, consistent with the Stolper-Samuelson prediction, we show that workers initially employed in occupations more intensively used in hard-hit industries experience larger declines in earnings. We also show that workers tend to move out of hard-hit industries, but they tend to remain in their initial occupation.

Keywords: Stolper-Samuelson Theorem; Earnings Inequality; Trade and Inequality;

JEL Classification: F11; F14; F16;

https://doi.org/10.21033/wp-2020-24