Paul A Samuelson Theory

Paul A Samuelson’s theory explains why and how the price of other resources becomes more uniform between trading countries. This chapter explains how and why international trade leads to wage convergence between trading countries.

Ex. 1‑20 Paul A Samuelson’s theory in the context of other historical events

Keywords: Price equalisation, Paul A Samuelson

Ex. 1‑21 Trends in wage levels in EU / OECD countries

Keywords: salary, factor price equalisation

The free international trade leads to equal pay for the same work and equal education, skills, and productivity for workers in all countries that trade freely with each other. Paul A. Samuelson’s resource price equalisation theorem is used as a strong argument in favour of free trade and globalisation. It is believed that free trade and the free movement of resources will eventually make all countries and their populations equally well-off, reducing the gap between the living standards of rich and developed countries and those of developing countries. Paul A Samuelson’s theorem of resource price equalisation has been proved, and more than 70 years later, in the third decade of the 21st century, there is still a very large gap between different countries, with very different prices for labour and capital, and a widening gap between the GDP per capita of rich countries and that of poor countries.

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