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Labour Market Effects of Trade in a Small Open Economy

Author

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  • Agnes Kügler
  • Klaus Friesenbichler
  • Cornelius Hirsch

Abstract

Austria is a small open economy that in the last decades underwent two different waves of increasing trade integration: one with Eastern Europe and one with China. Drawing on trade theory, this paper studies the effects of increases in trade with China and Eastern Europe on labour market dynamics in Austrian NUTS-4 regions for two ten-year periods between 1995 and 2015. Given the limited data available, the current analysis could not identify significant effects on aggregate labour dynamics neither for rising imports from Eastern Europe or China, nor for rising exports to Eastern Europe. However, there is weak evidence that exports to China have facilitated employment growth, especially in high quality segments. Overall, these results add a cautious perspective to the discussion of import competition.

Suggested Citation

  • Agnes Kügler & Klaus Friesenbichler & Cornelius Hirsch, 2024. "Labour Market Effects of Trade in a Small Open Economy," REGION, European Regional Science Association, vol. 11, pages 1-26.
    • Handle: RePEc:wiw:wiwreg:region_11_1_466
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    Cited by:

    1. Michael Peneder & Benjamin Bittschi & Anna Burton & Angela Köppl & Thomas Url, 2025. "The WIFO Radar of Competitiveness for the Austrian Economy 2024," WIFO Reports on Austria, WIFO, issue 2, January.
    2. Michael Peneder & Benjamin Bittschi & Anna Burton & Angela Köppl & Thomas Url, 2025. "Das WIFO-Radar der Wettbewerbsfähigkeit der österreichischen Wirtschaft 2024," WIFO Monatsberichte (monthly reports), WIFO, vol. 98(1), pages 29-41, February.
    3. Werner Hölzl, 2021. "Import Competition from China in Manufacturing after the Financial Crisis: Evidence for European Regions," WIFO Working Papers 622, WIFO.

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