Globalisation and euro area prices and labour markets: some evidence on the impact of low-cost countries

No risk and some fun? Trade and wages in the enlarged European Union

“…By contrast, Mishra and Kumar (2005) find the opposite effect for India, suggesting that trade liberalisation has led to decreased wage inequality. 11 Pula and Skudelny (2008) and Peltonen and Pula (2008) deal primarily with the impact of imports from low-cost countries on the demand for labour in some euro area countries. Rodríguez and Rodrik (2000) analyse the link between trade policy and economic growth.…”

The Impact of Globalisation on the Euro Area Macroeconomy

“…That said, little evidence is available on globalisation's impacts for employment in the economy as a whole. The analysis of Pula and Skudelny (2009) suggests that a one percentage point increase in openness reduces manufacturing employment growth by 0-0.2 percentage point (depending on the industry composition). Mankiw and Swagel (2006) argue that trade-related losses are a small portion of overall job flows, a fact that is also empirically borne out by the analysis of Hiebert and Vansteenkiste (2008a) for the US manufacturing sector.…”

“…Moreover, globalisation's contribution to an extended period of wage moderation within the euro area may very well have contributed to the strong job creation witnessed over the last decade as reported in Table 4. Empirical evidence on the aggregate wage effects of globalisation suggest that an increase in the real wage elasticity of labour demand appears to have occurred in the last years, particularly for low-skilled workers, which may indicate a decline in the bargaining power of these groups (see, for instance, Pula and Skudelny (2009), as well as Price and Cournède They also find that countries that have enacted reforms to lower the cost of labour to business and improve labour market flexibility have generally experienced a smaller decline in the wage share. Concerning the question of whether the observed drop in the wage share of several advanced economies is structural or transitory, it would appear that there is not yet a consensus in the literature.…”

The impact of globalisation on the euro area macroeconomy

“…Moreover, globalisation's contribution to an extended period of wage moderation within the euro area may very well have contributed to the strong job creation witnessed over the last decade as reported in Table 4. Empirical evidence on the aggregate wage effects of globalisation suggest that an increase in the real wage elasticity of labour demand appears to have occurred in the last years, particularly for low-skilled workers, which may indicate a decline in the bargaining power of these groups (see, for instance, Pula and Skudelny (2009), as well as Price and Cournède (2007), Molnar et al (2006), andDumont et al (2006)). The OECD (2007) finds that jobs and wages have become more vulnerable to external shocks -thereby possibly reducing the bargaining power of workers, especially low-skilled ones, which may therefore contribute to explain the falling share of wages in national income.…”

“…That said, little evidence is available on globalisation's impacts for employment in the economy as a whole. The analysis ofPula and Skudelny (2009) suggests that a one percentage point increase in openness reduces manufacturing employment growth by 0-0.2 percentage point (depending on the industry composition) Mankiw and Swagel (2006). argue that trade-related losses are a small portion of overall job flows, a fact that is also empirically borne out by the analysis ofHiebert and Vansteenkiste (2008a) for the US manufacturing sector.…”