Dynamics of Intraindustry Trade and Labor-Market Adjustment
نویسنده
چکیده
This paper investigates some dynamic aspects of the “smooth adjustment hypothesis” that is commonly associated with intraindustry trade (IIT). The analysis is conducted on a panel of plant-level employment data and industry-level production and trade data for Ireland. Rates of intraindustry job turnover are used as a proxy for labor-market adjustment. Three findings stand out. First, a measure of marginal IIT is found to be more appropriate for the analysis of adjustment issues than the traditional static IIT index. Second, the effect of marginal IIT on labor-market adjustment is most significant in the short term, namely for indices calculated on one-year intervals and lagged by one year. Third, the most significant determinants of the intraindustry job turnover rate are sector-level plant concentration ratios and trade openness.
منابع مشابه
Adjusting to Trade Liberalization: Reallocation and Labor Market Policies
Labor market responses to trade liberalization typically exhibit a slow reallocation of labor across industries, large costs for displaced workers, and a disproportionate adjustment burden for older workers. To explain these features and analyze alternative policies, I develop a two-sector small open economy model with overlapping generations, frictional labor markets, and sector-specific human...
متن کاملIntra-industry Trade as an Indicator of Labor Market Adjustment
INTRA-INDUSTRY TRADE AS AN INDICATOR OF LABOR MARKET ADJUSTMENT A growing body of recent empirical research uses measures of change in intra-industry trade as indicators of labor market adjustment. In this paper, we argue that the theoretical foundations for this work are problematic. To make this argument we develop a simple model with both interand intra-industry trade and adjustment. We defi...
متن کاملTrade Patterns and Welfare
By employing a model with international trade costs and imperfect competition, in which a domestic firm serves both the domestic market and the foreign market, we show that intraindustry trade compared to intersectoral trade is globally, but not mutually, welfare improving. When also foreign firms become active, competition strengthens but domestic welfare declines, because domestic consumers h...
متن کاملLabour-Market Effects of Intra-Industry Trade: Evidence for the United Kingdom
According to the “smooth adjustment hypothesis”, the labour-market adjustment costs entailed by trade liberalisation are lower if trade expansion is intra-industry rather than interindustry in nature. In this paper, we study the link between trade and labour market changes in UK manufacturing industries during the 1980s. We use industry-level measures of unemployment duration and wage variabili...
متن کاملOffshoring and Occupational Specificity of Human Capital∗
I document that workers in newly tradable service occupations possess more occupationspecific human capital and are more highly educated than workers in previously tradable occupations. Motivated by this observation, I develop a dynamic equilibrium model with labor market frictions and specific human capital to study the labor adjustment process after a trade shock. When calibrated to match the...
متن کامل