Industry Dynamics and Competition from Low-Wage Countries: Evidence on Italy

Stefano Federico

Oxford Bulletin of Economics and Statistics, 2014, vol. 76, issue 3, 389-410

Abstract: type="main" xml:id="obes12023-abs-0001">

This article analyses the effect of competition from low-wage countries on domestic activity, using data on 230 Italian manufacturing sectors between 1995 and 2007. It finds that low-wage import penetration is negatively related to employment and other measures of activity. The effect is significantly smaller in more skill, capital and R&D-intensive sectors and in more vertically differentiated sectors. There is also evidence of significant effects of low-wage competition through inter-industry linkages: employment is negatively related to low-wage import penetration in downstream sectors but positively related to low-wage import penetration in upstream sectors.

Date: 2014
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Working Paper: Industry dynamics and competition from low-wage countries: evidence on Italy (2012)
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