Professional article
Open access

How wages and employment adjust to trade liberalization: Quasi-experimental evidence from Austria

Published inJournal of international economics, vol. 86, no. 1, p. 68-81
Publication date2012

We study the response of regional employment and nominal wages to trade liberalization, exploiting the natural experiment provided by the opening of Central and Eastern European markets after the fall of the Iron Curtain in 1990. Using data for Austrian municipalities, we examine differential pre- and post-1990 wage and employment growth rates between regions bordering the formerly communist economies and interior regions. If the «border regions» are de fined narrowly, within a band of less than 50 km, we can identify statistically significant liberalization effects on both employment and wages. While wages responded earlier than employment, the employment effect over the entire adjustment period is estimated to be around three times as large as the wage effect. The implied slope of the regional labor supply curve can be replicated in an economic geography model that features obstacles to labor migration due to immobile housing and to heterogeneous locational preferences.

  • Trade liberalization
  • Spatial adjustment
  • Regional labor supply
  • Natural experiment
Citation (ISO format)
BRÜLHART, Marius, CARRERE, Céline, TRIONFETTI, Federico. How wages and employment adjust to trade liberalization: Quasi-experimental evidence from Austria. In: Journal of international economics, 2012, vol. 86, n° 1, p. 68–81. doi: 10.1016/j.jinteco.2011.08.010
Main files (1)
Article (Published version)
ISSN of the journal0022-1996

Technical informations

Creation02/11/2015 11:10:00 PM
First validation02/11/2015 11:10:00 PM
Update time03/14/2023 10:49:40 PM
Status update03/14/2023 10:49:40 PM
Last indexation08/29/2023 2:45:17 PM
All rights reserved by Archive ouverte UNIGE and the University of GenevaunigeBlack