THE EFFECT OF FOREIGN COMPETITION ON UK EMPLOYMENT AND WAGES - EVIDENCE FROM FIRM-LEVEL PANEL-DATA

This paper contributes to the sparse empirical literature on the effec ts of foreign competition on domestic employment and wages. The author s estimate a structural labour demand equation on UK firm-level panel data between 1982 and 1989 and several wage equations. When they restr ict the sample to the manufacturing sector only, they find for the uni onized firms that foreign competition has a negative effect on both wa ges and on employment. However, when UK manufacturing firms face only a few rivals, foreign competition has a positive effect on wages, but no effect on employment.