The effect of import penetration on labor market outcomes: the case of Austrian manufacturing industry

Abstract

This article estimates the effects of imports on employment, wages, and the wage share in Austria for the period of 1990–2005 using panel data of the manufacturing industry. There is evidence of a statistically significant but overall rather low negative effect of imports on both employment and wages, and thereby the wage share. However, the effects are economically much more significant and at times in the opposite direction when we distinguish final vs. intermediate imports as well as the origin of imports. Offshoring to Eastern Europe has a negative impact on employment but a positive effect on wages, indicating the dominance of scope effects.