Two Dimensions of Convergence: National and International Wage Adjustment Effects of Cross-border Outsourcing in Europe |
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| Authors: | Peter Egger Michael Pfaffermayr |
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| Affiliation: | Department of Economic Theory, Economic Policy and Economic History, University of Innsbruck, Universitaetsstrasse 15, A-6020 Innsbruck, Austria;E-mail:; Austrian Institute of Economic Research, PO Box 91, A-1103 Vienna, Austria. E-mail: . |
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| Abstract: | The paper proposes a distinction between the two dimensions of convergence—within and between countries—when analyzing the impact of cross‐border outsourcing on real wage rates in the EU‐15 and the CEEC. In the CEEC, international outsourcing has not affected the adjustment of average real wage rates at the manufacturing industry level, but it has led to a closure of the gap within a typical EU economy. Between‐country convergence is likewise fostered by cross‐border outsourcing, supporting the hypothesis that outsourcing facilitates international factor price equalization. |
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