A test for Heckscher-Ohlin using value-added exports
General Economics
2020-09-25 v1 Economics
Abstract
Empirical evidence for the Heckscher-Ohlin model has been inconclusive. We test whether the predictions of the Heckscher-Ohlin Theorem with respect to labor and capital find support in value-added trade. Defining labor-capital intensities and endowments as the ratio of hours worked to the nominal capital stock, we find evidence against Heckscher-Ohlin. However, taking the ratio of total factor compensations, and thus accounting for differences in technologies, we find strong support for it. That is, labor-abundant countries tend to export value-added in goods of labor-intensive industries. Moreover, differentiating between broad industries, we find support for nine out of twelve industries.
Keywords
Cite
@article{arxiv.2009.11743,
title = {A test for Heckscher-Ohlin using value-added exports},
author = {Philipp Koch and Clemens Fessler},
journal= {arXiv preprint arXiv:2009.11743},
year = {2020}
}