How wages and employment adjust to trade liberalization: Quasi-experimental evidence from Austria

Marius Brülhart, Celine Carrere and Federico Trionfetti

Journal of International Economics, 2012, vol. 86, issue 1, 68-81

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 differential pre- and post-1990 wage and employment growth rates between regions bordering the formerly communist economies and interior regions. If the ‘border regions’ are defined narrowly, within a band of less than 50km, we can identify statistically significant liberalization effects on both employment and wages. While wages responded earlier than employment, the employment effect over the entire adjustment period is estimated to be around three times as large as the wage effect. 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 (search for similar items in EconPapers)
JEL-codes: F15 R11 R12 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (54)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022199611001061
Full text for ScienceDirect subscribers only

Related works:
Working Paper: How Wages and Employment Adjust to Trade Liberalization: Quasi-Experimental Evidence from Austria (2012)
Working Paper: How Wages and Employment Adjust to Trade Liberalization: Quasi-Experimental Evidence from Austria (2011)
Working Paper: How Wages and Employment Adjust to Trade Liberalization: Quasi-Experimental Evidence from Austria (2011)
Working Paper: How Wages and Employment Adjust to Trade Liberalization: Quasi-Experimental Evidence from Austria (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:86:y:2012:i:1:p:68-81

DOI: 10.1016/j.jinteco.2011.08.010

Access Statistics for this article

Journal of International Economics is currently edited by Gourinchas, Pierre-Olivier and Rodríguez-Clare, Andrés

More articles in Journal of International Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().