Low-wage import competition, inflationary pressure, and industry dynamics in Europe

► We examine the effect of import competition from low-wage countries on European industry. ► The methodology utilizes comparative advantage-induced import competition. ► The sample covers five European markets, 110 industries, and the time from 1995 to 2008. ► When low-wage exporters capture 1% of a market, producer prices decrease by about 3%. ► Such import competition has reduced manufacturing employment by around 1.3 million.