The Stolper–Samuelson theorem and its applications

Pushan Dutt

Chapter 41 in Elgar Encyclopedia of International Trade, 2026, pp 212-217 from Edward Elgar Publishing

Abstract: The Stolper–Samuelson theorem, a cornerstone of trade theory, relates changes in output prices to factor returns in a general equilibrium setting. This entry examines the theorem's theoretical foundations, its extensions, and its empirical applications, especially in explaining the distributional consequences of globalization. While foundational, the theorem's predictions are often inconsistent with empirical evidence, particularly concerning the rising skill premium in both developed and developing nations. We review literature that incorporates skill-biased technological change, firm heterogeneity, global value chains, and labor market frictions, offering a more nuanced understanding. The entry also examines the theorem's application to the political economy of trade, including its influence on shaping policy preferences and the rise of populism. We conclude that while the original theorem provides a critical starting point, empirical tests and modern trade complexities require integrated theoretical approaches.

Keywords: Factor Returns; Distributional effects of globalization; Skill-biased technological change; Political economy (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035327492
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