ECONOMY

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prediction of this model, emphasized for example in Hiscox (2002), is that, as factors
become more specific—i.e. less able to move between sectors—politics will divide less
along factoral lines (workers vs. capitalists) and more along sectoral ones (textiles vs.
computers).
In sharp contrast, however, the Samuelson–Jones (SJ) specific-factors model, which
is the more widely accepted modern treatment, 8 emphasizes the ambiguous distributional
consequences for the mobile factor (depending, in essence, on its owners’
consumption preferences). In the SJ model, effects on specific factors, but not
necessarily mobile ones, continue to be governed by conventional factor-abundance
considerations.
Imagine for example an advanced economy with abundant physical capital, aboveaverage
human capital, but scarce unskilled labor, producing two kinds of goods: high
tech and low tech. The physical capital can be used only in the high-tech sector, the
unskilled labor only in low-tech production; skilled labor is used in both sectors and
is fully mobile between them. Then freeing up trade will benefit owners of physical
capital and harm unskilled workers; but it will have ambiguous effects on skilled
workers (i.e. owners of human capital), depending chiefly on their relative propensity
to consume high-tech products (which will rise in price as trade increases) vs. lowtech
ones (which will become cheaper). Certainly one possible political scenario, in
such an SJ world, is a protectionist coalition of unskilled and (at least some) skilled
workers; and the current outsourcing anxieties of developed-country skilled workers,
seemingly one of the advanced economies’ most mobile groups, make this version of
the specific-factors model seem quite relevant.
More generally, where the RV model predicts that increasing specificity of factors
will lead to sectoral coalitions, the SJ one predicts increasingly anomalous factoral
coalitions, e.g. the possibility that skilled labor in a developed economy, despite being
abundant, may wind up advocating protection—or, equally, that scarce skilled labor
in a developing economy could favor free trade. Exactly as in the HO model, however,
trade improves all countries’ (and hence world) welfare.
As an aside, it seems that human capital is inherently more specific than physical
capital. Smart owners of physical capital can nowadays diversify their portfolios with
a few mouse-clicks, but investment in human capital is arduous, focused, and long
term, be it the learning of a specific skill or the attainment of a university degree.
Moreover, Estevez-Abe, Iversen, and Soskice (2001) have emphasized that decisions
about specificity of human capital are to a large extent endogenous, conditioned on
subsidies to training and social insurance mechanisms: an eighteen-year-old, forced
to choose between a general and easily redeployable form of human capital (e.g. a
university education) and a much more specific one (e.g. mastering the production
processes of a particular firm), is likelier to choose the latter if she knows that
generous unemployment and retraining benefits will kick in if the firm or sector
subsequently fails.
⁸ See Samuelson 1971;Jones1971; or any conventional textbook treatment, e.g. Krugman and Obstfeld
1994, ch.3.