The Stolper–Samuelson Theorem Faces Congress

Abstract

The factor-industry detachment corollary of the Stolper-Samuelson theorem predicts that the economic interests of trade policy are independent of industry and depend only on the type of factor ownership. This paper examines whether congressional voting patterns on trade policy are determined by the factor endowment of the constituency or by its industrial composition. The industry model of trade policy determination is not rejected by the empirical tests while the results for the factor model are ambiguous. This provides evidence that the literature examining congressional voting patterns on broad-based trade policy should reevaluate the maintained assumption that factors do not matter.

The Structure of the American Economy

“…Lloyd (2000) extends the Stolper–Samuelson theorem to a model with a general pattern of factor ownership, and Beaulieu (2002) shows that congressional voting patterns can be explained in part by the distribution of factor ownership among constituencies. Using a Ricardo–Viner model where the number of factors exceeds the number of goods, we compute the exact Stolper–Samuelson effects of output price changes on factor rewards at a highly disaggregated level.…”

Trade, turnover, and tithing

“…For example, Rogowski (1987) argues that the theorem can be used to explain the lobbying coalitions that have formed in many developed countries since 1850. Beaulieu (1998Beaulieu ( , 2000 and Balistreri (1997) find support for HOS in the voting preferences of Canadians with respect to NAFTA, GATT, and the Canadian-US Free Trade Agreement of 1989. Scheve and Slaughter (1998) offer similar evidence based on the view of trade policy held by Americans.…”

Endogenous Preferential Trade Agreements: An Empirical Analysis

“…As Eugene Beaulieu (2002) discusses, CUSTA sailed through the U.S. House (358-40) and Senate (83-9) with little controversy while NAFTA became a divisive political issue and its approval was in doubt until the final votes (234-200 in the House and 61-38 in the Senate). Levy (1997) presents a model showing that free trade agreements are politically feasible only if the two countries involved have capitallabor ratios that are on the same side of the world median capital-labor ratio.…”