IDEAS home Printed from https://ideas.repec.org/p/wiw/wiwrsa/ersa05p240.html
   My bibliography  Save this paper

The impact of trade liberalisation on adjustment of regional wages in Estonia

Author

Listed:
  • Grigori Fainstein

Abstract

The purpose of this paper is twofold. First, we aim at analysing the development of regional specialisation in Estonia since the beginning of trade liberalisation and integration into the EU in the early 1990s. Second, given the patterns of developments in specialisation, we analyse how trade liberalisation has affected structure of regional wages. The main data used in this study consist of a panel of 5 geographic regions aggregated at the NUTS3 level by the EU classification. For every region we calculated indices of regional industrial specialisation in 1990-2002. The indices are based on data for employment in manufacturing industries classified by two-digit NACE standard (total of 13 industries). The impact of integration with EU on regional development is based on the data for average wages in industry in regions at NUTS IV level (15 administrative units of Estonia). The analysis of industrial specialisation in Estonian NUTS III regions showed that the level of specialisation has increased on average by 1-1.5% a year. As for transition economy time is a fair proxy to integration, we may conclude that initial stages of establishing closer economic relations with EU and voluminous target investments into the regions stimulated specialisation. Econometric analysis of relationship between relative regional wages and distance to the capital suggests an explanation consistent with new economic geography hypothesis. Surprisingly, in spite of small size of Estonian territory, distance have essensial effect on variations in regional wages. Our estimates show that integration with EU and trade liberalisation minimises negative impact of distance.

Suggested Citation

  • Grigori Fainstein, 2005. "The impact of trade liberalisation on adjustment of regional wages in Estonia," ERSA conference papers ersa05p240, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa05p240
    as

    Download full text from publisher

    File URL: https://www-sre.wu.ac.at/ersa/ersaconfs/ersa05/papers/240.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Devereux, Michael P. & Griffith, Rachel & Simpson, Helen, 2004. "The geographic distribution of production activity in the UK," Regional Science and Urban Economics, Elsevier, vol. 34(5), pages 533-564, September.
    2. Martin Hallet, 1998. "The regional impact of the single currency," ERSA conference papers ersa98p27, European Regional Science Association.
    3. Hanson, Gordon H, 1996. "Localization Economies, Vertical Organization, and Trade," American Economic Review, American Economic Association, vol. 86(5), pages 1266-1278, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Simonetta Longhi & Peter Nijkamp & Iulia Traistaru, 2003. "Determinants of Manufacturing Location in EU Accession Countries," ERSA conference papers ersa03p310, European Regional Science Association.
    2. Henry Overman & Stephen Redding & Anthony J. Venables, 2001. "The Economic Geography of Trade, Production, and Income: A Survey of Empirics," CEP Discussion Papers dp0508, Centre for Economic Performance, LSE.
    3. Stephen J. Redding, 2013. "Economic Geography: A Review of the Theoretical and Empirical Literature," Palgrave Macmillan Books, in: Daniel Bernhofen & Rod Falvey & David Greenaway & Udo Kreickemeier (ed.), Palgrave Handbook of International Trade, chapter 16, pages 497-531, Palgrave Macmillan.
    4. Traistaru, Iulia & Nijkamp, Peter & Longhi, Simonetta, 2002. "Regional specialization and concentration of industrial activity in accession countries," ZEI Working Papers B 16-2002, University of Bonn, ZEI - Center for European Integration Studies.
    5. Chiquiar, Daniel & Covarrubias, Enrique & Salcedo, Alejandrina, 2016. "Labor market consequences of trade openness and competition in foreign markets," Conference papers 332760, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Thomas M. Fullerton JR., 2001. "Specification of a Borderplex Econometric Forecasting Model," International Regional Science Review, , vol. 24(2), pages 245-260, April.
    7. Ferdinando Monte & Stephen J. Redding & Esteban Rossi-Hansberg, 2018. "Commuting, Migration, and Local Employment Elasticities," American Economic Review, American Economic Association, vol. 108(12), pages 3855-3890, December.
    8. Stephen J. Redding, 2010. "The Empirics Of New Economic Geography," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 297-311, February.
    9. Cutrini, Eleonora, 2009. "Using entropy measures to disentangle regional from national localization patterns," Regional Science and Urban Economics, Elsevier, vol. 39(2), pages 243-250, March.
    10. Fajgelbaum, Pablo & Redding, Stephen, 2014. "External integration, structural transformation and economic development: evidence from Argentina," LSE Research Online Documents on Economics 60285, London School of Economics and Political Science, LSE Library.
    11. G Ottaviano & Diego Puga, 1997. "Agglomeration in a global Economy: A Survey," CEP Discussion Papers dp0356, Centre for Economic Performance, LSE.
    12. Gouranga Gopal Das & Soamiely Andriamananjara, 2006. "Hub-and-Spokes Free Trade Agreements in the Presence of Technology Spillovers: An Application to the Western Hemisphere," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(1), pages 33-66, April.
    13. Di Giacinto, Valter & Pagnini, Marcello, 2011. "Local and global agglomeration patterns: Two econometrics-based indicators," Regional Science and Urban Economics, Elsevier, vol. 41(3), pages 266-280, May.
    14. Jane S Pollard, 2007. "Making Money, (Re)Making Firms: Microbusiness Financial Networks in Birmingham's Jewellery Quarter," Environment and Planning A, , vol. 39(2), pages 378-397, February.
    15. Seref Saygili & Cengiz Cihan & Cihan Yalcin & Turknur Hamsici, 2010. "Turkiye Imalat Sanayiin Ithalat Yapisi," Working Papers 1002, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    16. Giulio Bottazzi & Fabio Vanni, 2014. "A numerical estimation method for discrete choice models with non-linear externalities," LEM Papers Series 2014/01, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    17. Can-fei He & Sheng-jun Zhu, 2009. "Industrial agglomeration and labour productivity in transition: an empirical study of Chinese manufacturing industries," Post-Communist Economies, Taylor & Francis Journals, vol. 21(1), pages 103-115.
    18. Kentaro NAKAJIMA & Yukiko SAITO & Iichiro UESUGI, 2013. "Role of Inter-firm Transactions on Industrial Agglomeration: Evidence from Japanese firm-level data," Discussion papers 13021, Research Institute of Economy, Trade and Industry (RIETI).
    19. Nicole Palan, 2010. "Measurement of Specialization – The Choice of Indices," FIW Working Paper series 062, FIW.
    20. Björn Alecke & Gerhard Untiedt, 2008. "Die räumliche Konzentration von Industrie und Dienstleistungen in Deutschland," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 28(1), pages 61-92, February.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa05p240. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gunther Maier (email available below). General contact details of provider: http://www.ersa.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.