THE STOLPER-SAMUELSON THEOREM, WAGE GAP AND TRADE LIBERALIZATION: A COMPARATIVE ANALYSIS OF MÉXICO AND THE UNITED STATES, 1990-2020
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Abstract
The standard theory of international trade maintains that free trade leads to good and factor of production prices equalization. Following this conventional wisdom, North American countries —in particular Mexico— engaged in a major trade liberalization which led significant increases of both exports and foreign direct investment in Mexico. The aim of this article is to assess whether economic liberalization has induced a Stolper-Samuelson effect in Mexico and the United States. An econometric model is built using panel data for the period 1990-2020 to enquire whether the wage gap has been affected by trade liberalization. It is shown empirically that such gap has been reduced for low-skilled Mexican workers, whereas a similar phenomenon is confirmed for higher-skilled American workers.
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