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

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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.

Suggested Citation

  • Sergi Basco & Maxime Liégey & Martí Mestieri & Gabriel Smagghue, 2020. "The Heterogeneous Effects of Trade across Occupations: A Test of the Stolper-Samuelson Theorem," Working Paper Series WP-2020-24, Federal Reserve Bank of Chicago.
  • Handle: RePEc:fip:fedhwp:92685
    DOI: 10.21033/wp-2020-24
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    More about this item

    Keywords

    Stolper-Samuelson Theorem; Earnings Inequality; Trade and Inequality;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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