Using OECD input output matrices consistently, we offer a tentative solution to the mystery of missing trade. First, we confirm the usual rejection of factor price equalization and identical technologies. Second, we develop a new technique to compute the factor content of trade when countries'...

This paper contributes to the debate on the effects of trade versus technological change on wage differentials. We propose an explanation of the stylized facts which is based on interactions between openness and technological change because of labor market institutions and government...

Recent trade negotiations, both at the regional and multilateral level, have seen a resurgence of the issue of trade and labour standards. As the world economy becomes increasingly globalised and the volume of world trade flows keeps increasing between the North and the South, it is very likely...

This paper presents a drastically different approach to testing the Heckscher-Ohlin Theorem (HO Theorem) of factor endowment theory by explicitly recognizing the underlying assumptions of the theory and designing a testing strategy that is capable of controlling most of the influencing forces...

The U.K. skill premium fell from the 1950s to the late 1970s and then rose very sharply. This paper examines the contributions to these relative wage movements of international trade and technical change. We first measure trade as changes in product prices and technical change as TFP growth....

The classical Heckscher-Ohlin-Mundell paradigm states that trade and capital mobility are substitutes, in the sense that trade integration reduces the incentives for capital to flow to capital-scarce countries. In this paper we show that in a world with heterogeneous financial development, the...

We present a dynamic comparative advantage model in which moderate reductions in trade costs can generate sizable increases in trade volumes over time. A fall in trade costs has two effects on the volume of trade. First, for given factor endowments, it raises the degree of specialization of...

The neoclassical trade model is characterized by production frontiers, utility maximization, and offer curves in general functional form with general expenditure and revenue functions. The factor proportions Heckscher-Ohlin trade model is based on the comparative static analysis of production...

This paper develops a model of multi-product firms in the presence of different types of labor. I show that an increase in the supply of skilled labor has non- uniform impact on the firm scope: a rise in the number of skilled labor allows the highly productive firms to add more varieties into...

Following the approach proposed earlier, the authors extended the empirical tests of Heckscher-Ohlin Theorem to the European Union (EU) import markets. Utilizing extra-trade data provided by Eurostat on imports between 1995 and 2008 for EU15, those between 1999 and 2008 for EU27, and Chinese...