Working Paper

The Global Competition for Jobs in the Economic Crisis

WERI Working Paper, Warsaw School of Economics, 297

The global economic crisis seriously affects trade integration and labour markets. The crisis is going to disclose overcapacities and inefficient production patterns worldwide, thus intensifying the global competition for jobs and production locations. In the course of the crisis, the players on the world markets will be tested for their competitive strengths and weaknesses, and will have to redefine their role in the international division of labour eventually. During the past global boom, export patterns of the Visegrad countries already underwent substantial changes: Rapidly growing Visegrad countries’ exports to Western Europe went in line with a significantly higher share of technology-intensive goods, indicating a successful integration into Western European networks of production. Poland and the other Visegrad countries laid the ground for increasingly human-capital intensive production and employment. Therefore, catching-up countries might benefit from a higher offshoring intensity as a response to the competitive pressures triggered off by the economic crisis. An empirical analysis applying a detailed data set on German employment, classified by occupations, reveals a huge potential for offshorability of German jobs. On average, highly remunerated jobs requiring high skills turn out to be as easily offshorable as those of less qualified low-wage employees. Under these circumstances, high-income countries face the risk of losing ground vis-à-vis catching-up economies if they fail to invest into their knowledge and skill base continuously.

 

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JEL Classification
F15, F16, F2