April 1998

IZA DP No. 2: East-West Trade and Migration: The Austro-German Case

published in: R. Faini / J. de Melo / K. F. Zimmermann (eds.), Migration. The Controversies and the Evidence, Cambridge, 1999, 296-327;
see IZA Reprints 18/99

Trade and migration have become more important in recent years for Austria and Germany. The transition in Central and Eastern Europe has played an important role in this development. The derived labor market consequences are not fully clear so far. This paper presents the results of econometric sectoral panel studies for both countries The Austrian findings suggest that immigration exhibits negative effects on native employment and wages, and has no effects on total employment. Imports affect employment negatively and exports have a positive effect on wages. The German results indicate that immigration and trade is not harming employment and wages. Natives seem to be complements to migrants, at least to those from East Europe. Trade does not affect wages at all, and hardly affect employment. Thus one can expect that, while the Austrian labour market might be somewhat negatively affected by the East enlargement of the EU, the German labor market will not.