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economy integrating with a poorer global economy. While this integration is indeed “win-win” in between countries, it is pitilessly “win-lose” in terms of individual outcomes within countries. That is, the U.S. and its poorer trading partners
both end up with higher national incomes due to trade, but at the same time, this trade makes many (and possibly most) workers in the U.S. worse-off. This sad result is known to trade economists as the “curse of Stolper-Samuelson,” named after the theory that predicts it.
This paper revisits the insights of Stolper-Samuelson and estimates the impact on American wages of trade flows between the rich U...
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