Trends in Disaggregated Import and Export Prices in Europe: Implications for the Trade and Wages Debate

Posted: 3 Oct 2008

See all articles by Paul Brenton

Paul Brenton

World Bank

Anna Maria Pinna

Universita di Cagliari - Department of Economic and Social Sciences; Universita di Cagliari - Centre for North South Economic Research (CRENOS)

Date Written: January 1, 2001

Abstract

We consider carefully the evidence from traded prices (as proxied by unit values) concerning the transmission of the effects of globalisation to domestic labour markets. Using standard index number techniques we decompose changes in sectoral import and export unit values into movements due to changes in pure prices of the initial bundle of goods imported or exported and changes due to upgrading of that bundle. Looking at the imports of selected European countries of textiles, clothing and footwear relative to engineering products we find evidence of strongly falling pure prices of the unskilled intensive products relative to the skilled products in the 1980s. This reinforces the view that import prices can capture the impact of globalisation in terms of falling relative prices for products produced with the intensive use of unskilled labour. However, the trends are not common across all the unskilled sectors; footwear is clearly an exception. In the absence of detailed domestic data, we look for reactions by domestic firms to increased import competition in movements in the price and composition of exports. We find evidence of stiff price competition from imports being associated with similar movements in export prices and no support for the view that import competition from low-wage countries has led to upgrading of the quality of exports.

Keywords: import prices, globalisation, Tornqvist price index

JEL Classification: F14

Suggested Citation

Brenton, Paul and Pinna, Anna Maria, Trends in Disaggregated Import and Export Prices in Europe: Implications for the Trade and Wages Debate (January 1, 2001). Scottish Journal of Political Economy, Vol. 49, No. 1, pp. 1-21, 2002, Available at SSRN: https://ssrn.com/abstract=1276803

Paul Brenton

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Anna Maria Pinna (Contact Author)

Universita di Cagliari - Department of Economic and Social Sciences ( email )

V. S. Ignazio 17
Cagliari 09123, CA 09123
Italy

Universita di Cagliari - Centre for North South Economic Research (CRENOS) ( email )

V. S. Ignazio 78
Cagliari, 09124
ITALY

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