How Wages and Employment Adjust to Trade Liberalization: Quasi-Experimental Evidence from Austria

Details

Serval ID
serval:BIB_D33413962A01
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
How Wages and Employment Adjust to Trade Liberalization: Quasi-Experimental Evidence from Austria
Journal
Journal of International Economics
Author(s)
Brülhart M., Carrère C., Trionfetti F.
ISSN
0022-1996
Publication state
Published
Issued date
01/2012
Peer-reviewed
Oui
Volume
86
Number
1
Pages
68-81
Language
english
Abstract
We study the response of regional employment and nominal wages to trade liberalization, exploiting the natural experiment provided by the opening of Central and Eastern European markets after the fall of the Iron Curtain in 1990. Using data for Austrian municipalities, we examine di¤erential pre- and post-1990 wage and employment growth rates between regions bordering the formerly communist economies and interior regions. If the 'border regions'are de...ned narrowly, within a band of less than 50 kilometers, we can identify statistically signi...cant liberalization e¤ects on both employment and wages. While wages responded earlier than employment, the employment e¤ect over the entire adjustment period is estimated to be around three times as large as the wage e¤ect. The implied slope of the regional labor supply curve can be replicated in an economic geography model that features obstacles to labor migration due to immobile housing and to heterogeneous locational preferences.
Keywords
Trade liberalization, Spatial adjustment, Regional labor supply, Natural experiment
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Create date
19/08/2011 19:33
Last modification date
20/08/2019 15:53
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