Table of Contents

Industrial Productivity in Europe

Industrial Productivity in Europe

Growth and Crisis

Edited by Matilde Mas and Robert Stehrer

This book analyzes growth at the total economy and industry level from an international perspective, providing unique cross-country comparisons. The authors focus on the EU-25 countries but also include the US, Japan and Korea. The chapters explore growth patterns from a long-run perspective, although greater attention is paid to the period of expansion from 1995–2007 and the post 2008 period of crisis. Each contribution builds on a common methodology based on a detailed database providing a high degree of disaggregation with respect to the industries and factors accounting for growth. The role played by ICT is expertly emphasized, in particular the different paths followed in the US and the EU.

Chapter 13: The Effects of High-tech Capital, FDI and Outsourcing on Demand for Skills in West and East

Piero Esposito and Robert Stehrer

Subjects: economics and finance, industrial economics

Extract

Piero Esposito and Robert Stehrer 13.1 INTRODUCTION The changing patterns of relative demand for skills and for workers differentiated by level of educational attainment have attracted a lot of attention in recent years and the debate is far from closed. Changes in relative demand for workers with a high level of education (and to a lesser extent for those with a medium level of education) have been observed either in terms of rising employment shares and/or in terms of rising skill premium. In the literature various causes are discussed to explain these trends. First, increased competition with low-income countries was a matter of concern. This was triggered off in the US by the North American Free Trade Agreement (NAFTA) and the resulting trade liberalization with Mexico as a low-income neighbouring country. In Europe the debate started when the Central and Eastern European countries (CEECs) were integrated into the European division of labour after their transitional recessions. Similarly to the US, Western European countries were facing competition from neighbouring low-income countries; differently, however, from the US–Mexico case these countries were generally well endowed with skilled labour and could also build on a strong manufacturing base. Despite these facts the fear was that trade integration with the Central and Eastern European economies would lead to a relative decrease of demand for low-skill workers in the West due to imports of low-skill-intensive final products and outsourcing (i.e., imports of intermediate products) of low-skill-intensive production stages. Important studies analysing the employment effects of...

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