Globalization, innovation and the Norwegian labour market

In this project we have focused on different aspects of structural changes that has taken place in the Norwegian economy of the last decades, and challenges for the future and potential challenges for the welfare state. We have focused on issues related to innovation, globalization and also the very strong urbanization process that has taken place in Norway over the last decades. In this presentation we will focus on one important issue, and the is the impact on increased import from low cost countries like China which increased by 1500 percent from the mid 90s. to 2010. We have analyzed this in the following paper: Balsvik, Ragnhild, Sissel Jensen and Kjell G. Salvanes "Made in China, sold in Norway: Locallabor market effects of an import shock". Journal of Public Economics. The assumption has been that Norway would not be affected in a negative way by increased imports from low cost countries like China. The view has been that the composition of sectors in Norway is very different from that of China and thus China export very different products than we import. For instance, we got rid of most of the textile industry in the 70s and 80s and thus we will be unaffected. Moreover, if anything the net effect of increased trade with China would be positive since China was important energy intensive products from Norway. In this paper we set out to analyze whether increased exposure to import competition from China threaten the Nordic Model. We find negative employment effects for low-skilled workers, and observe that low-skilled workers tend to be pushed into unemployment or leave the labor force altogether. We find no evidence of wage effects. We partly expect this in a Nordic Model where firms are flexible at the employment margin, while centralized wage bargaining provides less flexibility at the wage margin. The import shock is smaller, and our estimates suggest that import competition from China explains almost 10\% of the reduction in the manufacturing employment share from 1996 to 2007 which is half of the effect found for the US.

One of the main pillars of the welfare state in an open economy such as Norway? in addition to the institutions that secure fairness in the income distribution - is that firms are able to reap productivity gains, and therefore welfare gains to society at large - by adapting to structural changes. Over the last few decades the big challenges have been increased technological change and increased globalization. These shocks lead to profit opportunities for some firms, while others lose their competitive edg e and close down. Different regions are typically affected differently by shocks depending on their resource base and industrial structure. This has direct effects on the labour market by inducing reallocation of workers and jobs both within and across in dustries, firms, and regions. In the project we will use register data from the 1960s onwards to understand the effect of these types of shock on the regional mobility of firms and workers, and thus on labour market outcomes. In a broader sense, the pro ject aims at understanding the larger picture of how the Norwegian economy and labour market are transforming from a dominance of blue collar manufacturing jobs to knowledge based firms within the service sector, and how to sustain the regional balance in Norway through the creation of these new jobs.