Does foreign trade eliminate inequality among factor incomes? The test of the Stolper-Samuelson Theorem on Turkish economy

Merter AKINCI

Abstract


The main motivation of the paper is to investigate the validity of the Stolper-Samuelson theorem using non-linear (asymmetric) ARDL (NARDL) analysis in the period from 1980 to 2019 in Turkish economy. The results of short and long-term analysis show that the Stolper-Samuelson theorem is not valid in Turkey. In other words, it is observed that foreign trade increases the income of capital, scarce factor, while it decreases the income of labor, abundant factor. Therefore, it has been noted that foreign trade gradually increases the income gap among factors in favor of capital. In this context, it can be said that while the capital class gets richer, the labor class gets poorer through foreign trade. In addition, the findings of the analysis showing that public policies increase the inequalities among factor incomes reflect that economic globalization process, foreign direct investments, migration inflows, inflation level and total factor productivity have an increasing effect on the income gap.

Keywords


The Stolper-Samuelson Theorem; Income Inequality; Foreign Trade; Non-Linear ARDL Analysis

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