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Working Papers, No. 2020-24, October 2020 Crossref
The Heterogeneous Effects of Trade across Occupations: A Test of the Stolper-Samuelson Theorem

This paper develops and implements a novel test of the Stolper-Samuelson theorem. We use nationally-representative matched employer-employee panel data from 1997 through 2015 to study the effect of the rise in China’s exports on French worker earnings. Our version of the Stolper-Samuelson theorem states that there is a negative correlation between occupation exposure to Chinese competition and change in worker earnings. First, we document substantial heterogeneity in trade adjustment across occupations. Then, consistent with the Stolper-Samuelson prediction, we show that workers initially employed in occupations more intensively used in hard-hit industries experience larger declines in earnings. We also show that workers tend to move out of hard-hit industries, but they tend to remain in their initial occupation.


Working papers are not edited, and all opinions and errors are the responsibility of the author(s). The views expressed do not necessarily reflect the views of the Federal Reserve Bank of Chicago or the Federal Reserve System.

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