The Effects of Globalization on Wages, Employment, and Wage Share in Austria^**This paper is a revised short version of a project report prepared for the Arbeiterkammer Wien. The author is grateful to Paul Ramskogler for the excellent research assistance, to Werner Raza, Sepp Zuckerstaetter, Martin Falk, Engelbert Stockhammer, Wilfried Alt-zinger, Christian Bellak, Thomas Grandner, Herbert Walther, Markus Leibrecht, Mehtap Hisarcikliogclu for fruitful discussions, and to Ursula Havel, Franz Granner, Lucia Glinsner, Irene Langer, René Dell'mour, Karl Klein, Henriette Killian, and Andreas Buzek for their valuable support about data. All remaining errors are mine.

​​1. Introduction

The aim of this paper is to empirically analyze the impact of globaliza-tion - as measured by the trade and capital fows - on the labor market outcomes in Austria. In the last ffteen years there has been a signifcant increase in the globalization of the Austrian economy through an incre-ase in exports, fnal imports, intermediate imports, and outward foreign direct investment (FDI). The integration of the Central and Eastern Europe (CEECs) to the European economic sphere, added a new dimension to the globalization of the Austrian economy, although Austrian trade and FDI towards Western Europe also increased signifcantly during this pe-riod. Austria is one of the relatively most integrated Western high wage-countries to the low-wage East. Its geographical proximity as well as his-torical ties and its small size played a role in this fast integration.