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Trade and Labour Markets: Vertical and Regional Differentiation in Italy

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  • Giuseppe Celi
  • Maria Luigia Segnana

Abstract

The labour market misfortunes of the less skilled and rapid growth of international trade in manufactured goods with less advanced countries are linked by the paradoxical observation that trade theorists are in the forefront of those denying the importance of trade in income distribution. This paper analyses this conclusion by stressing the importance of vertical differentiation of trade flows and regional differentiation of skills in order to identify labour market effects of trade integration. Vertical and regional differentiation in trade and labour markets are analysed for a country, Italy, where these two elements seem to play a crucial role. The results show a likely displacement effect on unskilled labour due to trade flows with less advanced countries. Given the characteristics of Italian trade and labour markets, a stronger trade‐induced displacement effect on demand for unskilled labour takes place in the North of the country. Thus the vertical differentiation in Italian intra‐industry trade is a warning against understating the effect of trade on labour markets if product heterogeneity is not adequately considered. The regional differentiation of skill intensity is another warning against understating the effect of trade on labour markets whenever cross‐sectoral effects and the change in relative specialization are not adequately considered.

Suggested Citation

  • Giuseppe Celi & Maria Luigia Segnana, 2000. "Trade and Labour Markets: Vertical and Regional Differentiation in Italy," LABOUR, CEIS, vol. 14(3), pages 441-472, September.
    • Handle: RePEc:bla:labour:v:14:y:2000:i:3:p:441-472
    DOI: 10.1111/1467-9914.00141
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    Cited by:

    1. Anna M. Falzoni & Alessandra Venturini & Claudia Villosio, 2004. "Wage Differentials and International Trade in Italy Using Individual Micro Data 1991-1996," Development Working Papers 190, Centro Studi Luca d'Agliano, University of Milano.
    2. Alessia Amighini & Stefano Chiarlone, 2003. "Rischi e opportunità dell’integrazione commerciale cinese per la competitività internazionale dell'Italia," KITeS Working Papers 149, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Nov 2003.
    3. Girijasankar Mallik & Parikshit K. Basu & John Hicks & Richard Sappey, 2014. "Do the Determinants of Employability and Earnings Returns Produce Similar Outcomes in Metropolitan and Regional Labour Markets? The Case of New South Wales, Australia," Regional Studies, Taylor & Francis Journals, vol. 48(10), pages 1706-1718, October.
    4. Enrico Marelli & Giuseppe Porro, 2000. "Flexibility and innovation in regional labour markets: The case of Lombardy," Departmental Working Papers 2000-08, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.

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