Abstract:

In this paper, the relationship between trade openness, income inequality and human development are examined, and the empirical validity of the Stolper-Samuelson theorem is tested. In this regard, panel data analysis is utilized by using Gini index, trade openness ratio, Human Development Index, GDP per capita growth rate and squared GDP per capita growth rate, human capital, public size, arable land and inflation rate of 15 OECD countries for the period 2004-2016. In this study, panel unit root tests, Kao panel cointegration test, FMOLS method and Granger causality test are applied. According to FMOLS estimator, a 1 unit increase in trade openness increases Gini index by 0.73 units and a 1 unit increase in Human Development Index decreases Gini index by 1.05 units. Additionally, Human Development Index and trade openness cause Gini index. There is a bi-directional causality between Human Development Index and trade openness. As trade openness increases, Gini index also increases. This reveals that the results do not support the Stolper-Samuelson theorem.

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