Working Paper: CEPR ID: DP1168
Authors: Karl Aiginger; Rudolf Winter-Ebmer; Josef Zweimüller
Abstract: Recent years have seen a major structural break in trade relations between West European countries and the former Eastern bloc. Austria experienced a disproportionately large bilateral trade creation with these countries. In this paper we take a closer look at the impact this trade growth has had on the Austrian labour market. To differentiate as far as possible between different segments of the labour market, we concentrate on unemployment experience and wage growth for a panel of individual workers in Austrian industry. The results show rather small employment effects, the impact on wage growth is more pronounced with interesting modifications for mobile and immobile workers.
Keywords: CEEC; trade; unemployment; wage growth
JEL Codes: F14; J23; J31; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increase in exports to CEECs (F19) | Reduction in unemployment rates among workers in high-export industries (F66) |
| Higher import penetration (F14) | Increase in unemployment rates (F66) |
| Higher import penetration (F14) | Greater risks for immobile workers (J62) |
| Increase in CEEC import shares (F14) | Lower wage growth (J31) |
| Increase in CEEC export ratios (F14) | Increase in wage growth (J39) |
| Mobile workers (J61) | Benefit from positive export performance (F14) |
| Immobile workers (J61) | Face greater risks from import competition (F14) |