The Lisbon Agenda and the Relocation of Economic Activities Abroad decreases, their wages go down and workers are displaced in the restructuring process. The overall effect on the labour market then depends on the magnitude of the gains from relocation and on the structure of the labour market. When companies relocate stages of the production process or outsource them to lower­cost or more efficient suppliers, they should be able to expand production and employment in stages where they are strong. The overall effect of outsourcing depends on whether firms could and did create more jobs than were lost before. This argument assumes that workers are perfectly flexible and can easily move between jobs and sectors. In reality, this depends on the structure of the labour markets and the profiles of qualification. Empirical evidence is difficult to obtain since it has proven difficult to disentangle the interlinked effects of technology, trade and relocation on wage and employment levels(Morrison-Paul and Siegel, 2001). There are numerous studies on the US manufacturing sector that show that there is an effect of outsourcing on jobs but that it has been exaggerated in the political debate. A major part of the decline in wages of low-skilled workers and the loss of manufacturing are attributable to technological change with computers and machines replacing manufacturing workers, rather than foreign workers replacing domestic workers. A study by Alliance Capital Management found that the United States saw an 11% decrease in manufacturing employment between 1995 and 2002 while manufacturing jobs decreased by 15% in China and by 20% in Brazil. The US number corresponds to the global average of 11% while global manufacturing output increased by 30%. This gives reason to conclude that jobs are not lost because of outsourcing but because of technological change(Drezner, 2004). A widely quoted empirical study by Feenstra and Hanson on the reasons for the decline of the cost share of US manufacturing labour in the production process found that 11% to 15% of the decline in wages between 1979 and 1990 can be attributed to outsourcing (Feenstra and Hanson, 1996). A growing number of studies examine the effects of international relocation on European labour markets. For Germany, various studies find similar results as for the US. Imports of intermediate goods have a negative effect on wages of low-skilled workers and on the demand for low-skilled labour(Geishecker and Goerg, 2004). The exact nature of the effect depends on the structure of the labour market. In flexible labour markets(e.g. the United Kingdom), relative wages of unskilled workers decreased. In more rigid labour markets(e.g. Sweden, Italy), the effect translates into a decrease in employment of low­155