Since tariffs have been lowered, the gap has widened in some countries. In Mexico, for instance, the difference between a typical university-educated worker's pay and that of an unskilled worker rose by a third between 1987 and 1993. What makes these figures intriguing is that, on the face of it, they contradict the evidence from rich countries and refute the Stolper-Samuelson theorem. Why Because the theory suggests that freer trade should reduce inequality in poorer countries, just as it increases it in rich ones. In effect, the theory says that whatever sort of labour is most abundant in the economy before liberalising is the one that prospers most as a result of trade.
Poor countries have lots of unskilled labour.
They should therefore export goods that are intensive in unskilled labour, pushing up its wages. Adding to the puzzle, if the Stolper-Samuelson theory works anywhere, it should work in the third world. Trade often plays a much more important role in many developing economies than it does in rich ones, and many poor countries have recently undertaken radical trade liberalisations. It would be rash to draw firm conclusions from this handful of countries. Nonetheless, Mr Robbins's findings demand an explanation.