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Industry dynamics and competition from low-wage countries: evidence on Italy

Stefano Federico

No 879, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper analyses the effect of competition from low-wage countries on domestic activity, using data on 230 Italian manufacturing sectors between 1995 and 2007. We find that low-wage import penetration is negatively related to employment and other measures of activity. The effect is significantly lower 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.

Keywords: import penetration; low-wage country competition; factor proportions; inter-industry linkages (search for similar items in EconPapers)
JEL-codes: D57 F14 F16 L60 (search for similar items in EconPapers)
Date: 2012-09
New Economics Papers: this item is included in nep-eur, nep-hme and nep-int
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Journal Article: Industry Dynamics and Competition from Low-Wage Countries: Evidence on Italy (2014) Downloads
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