The Heckscher-Ohlin’s factor-price equalisation theorem, in essence, indicates a change in the domestic income distribution as an impact of international trade. Paul Samuelson and Wolfgarg Stopler empirically obtained that: “An increase in the relative price of labour intensive product will increase the wage rate relative to both commodity prices and reduce the rent relative to both commodity prices.”
When the wage-rent ratio improves on account of an increase in relative price of industrial product, labourers tend to gain more relative to capitalist, when a country enters into foreign trade.
The Stopler-Samuelson theorem states that when wage rise relative to both labour-intensive and capital-intensive goods prices, workers are better off. Rents, on the other hand, fall relative to both commodity prices; as such, capitalists are worse off.
The theorem asserts that under free trade situation, when relative prices of goods rise, the real income of the relatively abundant factor also rises and that of relatively scarce factor tends to decline. When the gain accrues to the trading country, the abundant factor gains proportionately more than the loss to the income of the scarce factor.
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In short, the Stopler-Samuelson theorem implies that an increase in any product price due to trade produces a proportionally greater increase in the price of factor used intensively to that good and a fall in the price of the factor used less intensively. The income gain is shared in a greater proportion by the abundant factor.