How wages and employment adjust to trade liberalization: Quasi-experimental evidence from Austria

► The fall of the Iron Curtain implied trade liberalization also for Western Europe. ► We study post-1990 Austrian employment and wage changes along the eastern border. ► Employment and wages increased more strongly in border regions than in the interior. ► The employment effect was around three times as large as the wage effect. ► This adjustment parameter can be replicated in an economic geography model.