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Marginal Intraindustry Trade and Labor Adjustment

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  • Lovely, Mary E
  • Nelson, Douglas R

Abstract

In the context of Ethier's model of the division of labor, this paper accomplishes three tasks. First, it complements existing literature on the algebraic properties of marginal intraindustry trade (MIIT) measures by embedding one of these measures in a general equilibrium model. Consistent with the existing literature, it is found that change in the Grubel-Lloyd index provides systematically different economic information from change in the MIIT index. Second, it examines the connection between intraindustry trade and intra- industry adjustment. Here it is found that the informal assumption that intraindustry trade generates only intraindustry adjustment cannot be sustained. That is, intraindustry trade will generally induce interindustry adjustment. Finally, because intraindustry trade generates interindustry adjustment, increased intraindustry trade will generally induce long-run changes in relative factor prices. This suggests, given the prominence of intraindustry trade in OECD countries, that there may be problems with inference on the link between trade and wages undertaken in a strict Heckscher-Ohlin framework. Copyright 2000 by Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 8 (2000)
Issue (Month): 3 (August)
Pages: 436-47

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Handle: RePEc:bla:reviec:v:8:y:2000:i:3:p:436-47

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Cited by:
  1. Joseph Francois & Kevin Grier & Douglas Nelson, 2004. "Globalization, Roundaboutness, and Relative Wages," Tinbergen Institute Discussion Papers 04-021/2, Tinbergen Institute.
  2. Joseph Francois, 2004. "Assessing the Impact of Trade Policy on Labor Markets and Production," Tinbergen Institute Discussion Papers 04-058/2, Tinbergen Institute.
  3. Mary Lovely & Douglas Nelson, 2002. "Intra-industry trade as an indicator of labor market adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 138(2), pages 179-206, June.
  4. Marius Brülhart & Robert Elliott, 2002. "Labour-market effects of intra-industry trade: Evidence for the United Kingdom," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 138(2), pages 207-228, June.
  5. Roger White & Cheng Chen, 2012. "US manufacturing and vertical/horizontal intra-industry trade: examining the smooth adjustment hypothesis," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, Inderscience Enterprises Ltd, vol. 4(1/2), pages 1-20.
  6. Joseph F. Francois & Douglas Nelson, 2002. "A Geometry Of Specialisation," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 112(481), pages 649-678, July.
  7. David Greenaway & Michelle Haynes & Chris Milner, 2002. "Adjustment, employment characteristics and intra-industry trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 138(2), pages 254-276, June.
  8. Fertő, Imre, 2006. "A társulási szerződés alkalmazkodási költségei a magyar élelmiszeriparban
    [The adjustment cost of the Association Agreement in the Hungarian food industry]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 799-811.
  9. Marius Brülhart, . "An Account of Global Intra-industry Trade, 1962-2006," Discussion Papers 08/08, University of Nottingham, GEP.
  10. Imre Ferto & Lionel J. Hubbard, 2001. "Intra-Industry Trade in Agri-Food Products between Hungary and EU," IEHAS Discussion Papers, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences 0106, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  11. Nuno Carlos Leitão & Bogdan Dima & Dima (Cristea) Stefana, 2013. "Marginal Intra-industry Trade and Adjustment Costs in Labour Market," Working Papers, Fondazione Eni Enrico Mattei 2013.39, Fondazione Eni Enrico Mattei.

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