![Page 1: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/1.jpg)
Chapter 5 Who gains and who loses from trade?
Also will look at Appendix B.
Link to syllabus
![Page 2: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/2.jpg)
Figure 5.1 page 71 How free trade affects income distribution
![Page 3: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/3.jpg)
Figure 5.2 page 72Effects of Free Trade: Short run versus Long Run
![Page 4: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/4.jpg)
Stolper Samuelson Theorem (p. 72)
An event that changes (relative) product prices will raise the return of the factor used intensively in the rising price industry, and lower it for the other factor.
Specialized Factor pattern: The more a factor is specialized, the more it stands to gain (or lose) from a change in the (relative) product price.
![Page 5: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/5.jpg)
Stolper and Samuelson, in AA, ~1990
![Page 6: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/6.jpg)
International
Factor
Price Equalizatio
n
•W
ith the shift to free trade: For each factor, its rate of return becom
es more sim
ilar between
countries. Under ideal
conditions, the factor’s real rate of return is the sam
e in different countries.
•Exam
ple: Labor.
With no trade, the w
age rate is high in the labor-scarce country (e.g., U
S). The wage
rate is low in the labor-
abundant country (R.o.W.).
With free trade, the im
port of labor-intensive products pushes the w
age rate down
in the labor-scarce country (e.g. U
S). The export of labor-intensive products pulls the w
age rate up in the labor-abundant country (R.o.W
.).
![Page 7: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/7.jpg)
Figure 5.3 page 77Shares of the world’s factor endowments, 2007-2010
![Page 8: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/8.jpg)
![Page 9: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/9.jpg)
Figure 5.4 page 80. U.S. trade: consistent with H-O Theory?
![Page 10: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/10.jpg)
Figure 5.5 page 84. Schematic View of Factor Content of U.S. Exports
![Page 11: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/11.jpg)
Figure 5.6 page 85Factor content of Canada’s exports
![Page 12: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/12.jpg)
China: Value of Exports and Imports, 1976-2006 p. 83
![Page 13: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/13.jpg)
China’s Exports and Imports, 2009. p. 82
![Page 14: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/14.jpg)
Land/Labor and Wage/Rent Ratios, 1870-1940.Great Britain, Egypt, Thailand, and Uruguay
Source: Williamson, NBER #7784
Land/Labor Wage/Rent
1870 19401870 1940
![Page 15: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/15.jpg)
EYE ON THE GLOBAL ECONOMY
Back to list
Bade/ParkinP. 241
Persistent Gaps or Convergence?
![Page 16: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/16.jpg)
EYE ON THE GLOBAL ECONOMY
Back to list
Bade/ParkinP. 241
Very interesting
Persistent Gaps or Convergence?
![Page 17: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/17.jpg)
Gini Coefficient of Income Inequality in the U.S.
2010
2007
2004
(35)
2001
1998
1995
(25)
1992
(22)
1989
1986
1983 (
19)19
8019
77
1974
(16)(
15)
1971
(13)
1968
1965
(10)
1962
(9)
1959
1956
1953
1950
1947
(5)
0.30
0.33
0.35
0.38
0.40
0.43
0.45
0.48
0.50
Inequality in US
Gini
Source: US Gov’t http://www.census.gov/hhes/www/income/data/historical/families/index.html
![Page 18: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/18.jpg)
Sala-I-Martin 4
Global Income Inequality, using Gini Coefficient
![Page 19: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/19.jpg)
Sala-I-Martin’s Estimates
China
India
US
QJE 2006
![Page 20: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/20.jpg)
Sala-I-Martin 2
![Page 21: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/21.jpg)
World Distribution of Income
![Page 22: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/22.jpg)
World Income Inequality 1970-2000
Source: Sala-i-MartinQJE 2006
![Page 23: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/23.jpg)
Regional Poverty Rates 1970-2000
Source: Sala-i-Martin QJE (2006)
![Page 24: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/24.jpg)
Suggested reading in Chapter 5 (p. 88).Names from UM-Ann Arbor campus
![Page 25: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/25.jpg)
Figure B.1 page 670 Production Functions with Fixed Factor Proportions
![Page 26: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/26.jpg)
Figure B.2 page 671Edgeworth Bowley Box Diagram: Fixed factor proportions
![Page 27: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/27.jpg)
Figure B.3 Page 671Production Possibility Curve, Fixed Factor Proportions
![Page 28: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/28.jpg)
Both curves together p. 671
![Page 29: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/29.jpg)
Figure B.4 page 672PPC Curve with constant opportunity costs
![Page 30: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/30.jpg)
Figure B.5 page 673 Variable factor proportions
![Page 31: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/31.jpg)
Question page 89.
![Page 32: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/32.jpg)
Question 10 p. 90
![Page 33: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/33.jpg)
![Page 34: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/34.jpg)
Sala-I-Martin’s Estimates
![Page 35: Chapter 5 Who gains and who loses from trade?](https://reader033.vdocuments.mx/reader033/viewer/2022050800/56813b5d550346895da4569f/html5/thumbnails/35.jpg)
Sala-I-Martin 3