Trade, Multinationals and Labour
نویسنده
چکیده
The theory of international trade suggests that free trade will raise national income. It does not, however, suggest that the incomes of all factors of production will rise. Indeed, Stolper and Samuelson (1941) showed that the removal of import barriers could lower the income of the factor of production used relatively intensively in the production of imported products. Therefore, if OECD imports are produced using unskilled labour relatively intensively, freer trade could actually reduce the wages of unskilled workers. In a second noteworthy application, trade theory also predicts that trade can lead to ‘factor-price equalisation’. Under certain highly restrictive assumptions – in particular that competitive conditions prevail and that technological capabilities are uniform worldwide in both traded and non-traded goods – returns to factors would be equalised around the world.
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