Trade and Labor usage: An examination of the Stolper-Samuelson theorem for the South African manufacturing industry
This paper advances on previous work on the effects of trade on labour markets as identified by the Stolper-Samuelson theorem in three respects. First, we employ dynamic heterogeneous panel estimation techniques, which allows to investigate both (possibly homogeneous) long-run relationship and (possibly heterogeneous) short-run dynamics simultaneusly. Second, we consider evidence from a middle income country with abundant unskilled labor. Third, we investigate Stolper-Samuelson effects in both price and quantity dimension. We find that outputs prices increase most strongly in sectors that are labor intensive. In particular, trade has mandated positive earnings increases for both labor and capital, though increases are greater for labour, while technology has madated negative earnings increases for both labor and capital. Given these results, growth of real wage rates are a plausable explanation of the high and sustained levels of unemployment in South African labor markets.
|Date of creation:||Dec 1999|
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