Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/220076
Authors: 
Christen, Elisabeth
Pfaffermayr, Michael
Wolfmayr, Yvonne
Year of Publication: 
2019
Series/Report no.: 
WIFO Working Papers 593
Abstract: 
This paper provides new insight into the firm-level employment impacts of trade cost changes at the industry level in the Austrian services sector. We apply a two-part model of firm survival (exit) and firm growth. Separate regressions for firm entry rates at the industry-region level complete the picture of total trade-induced net job creation. We implement the trade cost measure introduced by Chen and Novy (2011) and base it on own estimates of industry specific substitution elasticities. Falling trade costs in the Austrian services sector over the period 2000 to 2014 resulted in net job creation of about 19,000 jobs accounting for 9.5 percent of overall job flows in the sector. The smallest and least productive firms contract while large and productive firms expand as predicted by theory. Most adjustments occur at the extensive margin due to changes in the probability of firm survival.
Subjects: 
Services trade
Trade costs
Elasticity of substitution
Firm-level evidence
Heterogenous firms
Gravity model
Job ows
Trade and employment
JEL: 
C15
C21
C25
C23
C26
F14
F16
F66
J21
D21
L20
L80
Document Type: 
Working Paper

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