Trade's Impact on the Labor Share: Evidence from German and Italian Regions
Claudia M. Buch
IAW Discussion Paper No. 46,
2008
Abstract
Has the labor share declined? And what is the impact of international trade? These
questions are not only relevant in an international context they also matter for
understanding the regional distribution of incomes in a given country. In this
paper, we study two regions with trade exposures that differ from the rest of the
country, and which display distinct changes in the labor share. East German and
Southern Italian regions have a degree of international openness which is below
the countries’ averages. At the same time, there has been a more pronounced
decline in the labor share in East Germany than in West Germany. In Southern
Italy, the labor share has increased in recent years. We show that increased trade
openness is not the main culprit behind changing labor shares.
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EU Eastern Enlargement and Structural Change: Specialization Patterns in Accession Countries and Economic Dynamics in the Single Market
Albrecht Kauffmann, P. J. J. Welfens, A. Jungmittag, C. Schumann
Diskussionsbeiträge des Europäischen Instituts für Internationale Wirtschaftsbeziehungen (EIIW), Bergische Universität Wuppertal, Nr. 106,
No. 106,
2003
Abstract
This paper analyses key issues of structural change and specialization patterns in the economies of an enlarged European Union. In all transition countries we observe a shift from the agricultural and industrial sector towards the service sector in terms of employment and productivity; however, in some countries a reindustrialisation drives is observed in a late transition stage. While some countries namely the Czech Republic, Hungary, Slovakia, Poland, Estonia and Slovenia, have improved their productivity especially in medium-technology-intensive industries and may advance on the technological ladder, others remain unchanged and seem to get locked in labour-intensive industrial sectors. In the context of EU-enlargement, we expect trade creation – going along with a rise of intra-industry trade – and higher FDI-activities. Countries will have to adjust along the logic of comparative advantage, however, technological upgrading and human capital formation are fields in which government can stimulate the direction of comparative advantage. According to the Gerschenkron-hypothesis the accession countries have an “advantage of backwardness. Since accession countries have a low R&D-GDP ratio in the early transition stage rising government expenditures on research and development plus higher education is crucial. We expect the EU-15 countries in general to benefit from enlargement but gains will be asymmetric across countries: economic geography matters. Austria, Germany, the Scandinavian countries, the Netherlands, Italy and France are likely to profit more than the other members of EU-15. Germany and Austria additionally play a particularly crucial role as origins of FDI. Future research should focus on the speed and the scope of structural adjustment.
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