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This paper investigates how labour market regulations alter the adverse impact of rising import competition from China in European local labour markets between 1997 and 2006. The paper constructs measures of regional exposure to Chinese imports based on previous literature and on regional labour market frictions exploiting involuntary labour reallocations. Taking into account the endogeneity of import competition and its interaction with labour market regulations, the paper finds that regions more exposed to the rise of China have suffered from a reduction in manufacturing employment shares. This shock grows larger with regional labour market frictions; hence, it exacerbates the impact of trade shock on employment. Moreover, the paper finds that employment in public services, and not in construction or private services sector, absorbed the negative shock to the manufacturing sector. The unemployment rate, the labour force participation rate and wages in all sectors are unresponsive to import competition from China.
We study how firm premia influence the gender wage gap for 21 European countries. We use a quadrennial harmonized matched employer–employee dataset to estimate gender-specific firm premia. Subsequently, we decompose the firm-specific wage premia differential into within- and between-firm components. On average, the former accounts mainly for the decline in the pay gap between 2002 and 2014. We pay particular attention to the development of each component by age group, and find that the between-firm component is associated with an increase in the gender pay gap over age. The decomposition of firm premia allows us to investigate how institutional settings relate to each component. We associate the within-firm component with collective bargaining at the national and firm levels, and the between-firm component with family policies. Decentralized wage bargaining is associated with a larger within-firm pay gap, whereas family policies incentivizing women to return to employment after family formation are linked to a smaller between-firm component.