The author is grateful to two anonymous referees, Matteo Bugamelli, Gilles Duranton, Roberto Tedeschi and seminar participants at the Rimini Conference in Economics and Finance, the EPI Conference in Parma, the European Trade Study Group in Lausanne and the Demography of Firms and Industries Conference at Paris Est Créteil University. The views expressed in this article are those of the author and do not necessarily reflect those of the Bank of Italy.
Industry Dynamics and Competition from Low-Wage Countries: Evidence on Italy†
Article first published online: 31 MAR 2013
© Blackwell Publishing Ltd and the Department of Economics, University of Oxford 2013.
Oxford Bulletin of Economics and Statistics
How to Cite
Federico, S. (2013), Industry Dynamics and Competition from Low-Wage Countries: Evidence on Italy. Oxford Bulletin of Economics and Statistics. doi: 10.1111/obes.12023
- Article first published online: 31 MAR 2013
This article analyses the effect of competition from low-wage countries on domestic activity, using data on 230 Italian manufacturing sectors between 1995 and 2007. It finds that low-wage import penetration is negatively related to employment and other measures of activity. The effect is significantly smaller in more skill, capital and R&D-intensive sectors and in more vertically differentiated sectors. There is also evidence of significant effects of low-wage competition through inter-industry linkages: employment is negatively related to low-wage import penetration in downstream sectors but positively related to low-wage import penetration in upstream sectors.