Working Paper: CEPR ID: DP15186
Authors: Mart Mestieri; Sergi Basco; Gabriel Smagghue; Maxime Liegey
Abstract: This paper develops and implements a novel test of the Stolper-Samuelson theorem. Weuse nationally-representative matched employer-employee panel data from 1997 through2015 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 betweenoccupation exposure to Chinese competition and change in worker earnings. First, we document substantial heterogeneity in trade adjustment across occupations. Then, consistentwith 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 remainin their initial occupation
Keywords: Stolper-Samuelson; Inequality
JEL Codes: F11; F14; F16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Occupational exposure to Chinese competition (F66) | Changes in worker earnings (J31) |
| Higher exposure to competition (L19) | Larger declines in earnings (J39) |
| Industries facing significant competition from Chinese imports (F14) | Larger declines in earnings for workers (J39) |
| Transition to different industries (J62) | Remain within initial occupational categories (J62) |
| Trade shock effect builds over time (F69) | Significant declines observed 5 to 10 years post-shock (E32) |