Immigration, Trade, and Austrian Unemployment

In this paper we look at the effects of immigration and trade with Eastern Europe on unemployment in Austria. Using individual data over the period 1989-92 of male blue-collar workers employed in the Austrian manufacturing sector, we decompose possible detrimental impacts in unemployment entry effects and unemployment duration effects. We find that unemployment entry does not seem to be strongly affected by the recent increase in the flow of immigrants. This is different from the immigration effect on unemployment duration. Within almost all subgroups there is a significant increase in the length of unemployment spells as a result of increased immigration. Increased trade with Central and East European Countries (CEECs) seems to have increased the risk of unemployment entry, and to a lesser extent also the duration of unemployment. This is different from trade with the rest of the world, where export increases have an unemployment reducing effect.