[Show abstract][Hide abstract] ABSTRACT:
This paper presents a new assessment the Stolper-Samuelson Theorem, relaxing the neoclassical hypothesis of perfect factor mobility and wage flexibility. We build a model economy in which some sector face imperfect competition and workers are unionized in those sector, so that wages are not flexible. The model predicts that the impact of trade openness on wage differentials is smaller in unionized sector, since they suffer two opposite effect. First, we have the standard Stolper-Samuelson effect. The second effect relates to the additional partial adjustment process between wages and employment due to the unionization, dampening down the Stolper-Samuelson effect, since it restricts factor mobility between sectors, thus reducing wages changes. For unionized sectors, we construct an alternative version of the mandates wages empirical model incorporating the effects of wage bargaining. We test the new model for the United States and we found evidence of a positive impact of trade openness on wage differentials for that economy.