Importing jobs and exporting firms? : on the wage and employment implications of italian trade and foreign direct investment flows

International economie integration is often blamed for the deteriorating fortunes of unskilled workers in industriai countries. We look at the labor market impact of trade and foreign direct investment in the case of Italy. Our empirical framework allows for trade, technology and factor supply effects. We find that international trade did not contribute to Italian labor market problems. Indeed, given that Italy holds quite a di stinct pattern of trade specialization, compared to other industrialized countries, in ternational integration as reflected in falling import prices may have boosted the de mand for labor there. We also argue that the inability of the Mezzogiorno's economy to adjust to the changing international environment is one of the main stumbling blocks in Italian economy. Finally, we find that greater firms' mobility may have wea kened the power of trade unions and contributed to wage