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International Trade Patterns and Labor Markets – An Empirical Analysis for EU Member States

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  • Götz Zeddies

Abstract

During the last decades, international trade flows especially of the industrialized countries allegedly became more and more intra-industry. At the same time, employment perspectives particularly of the low-skilled by tendency deteriorated in these countries. This phenomenon is often traced back to the fact that intra-industry trade, which should theoretically involve low labor market adjustment, became increasingly vertical in nature and might thus entail labor market disruptions. Against this background, the present paper investigates the relationship between international trade patterns and selected labor market indicators in European countries, with a focus on vertical intra-industry trade. As the results show, neither inter- nor vertical intra-industry trade do have a verifiable effect on wage spread in EU member states. As far as structural unemployment is concerned, the latter increases only with the degree of countries’ specialization on capi-tal intensively manufactured products in inter-industry trade relations. Only for unemployment of the less-skilled, a slightly significant impact of superior vertical intra-industry trade seems to exist. However, the link between unemployment of the lower qualified and inter-industry specialization on labor intensive goods as well as parts and components imports is considerably higher.

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Bibliographic Info

Paper provided by Halle Institute for Economic Research in its series IWH Discussion Papers with number 15.

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Date of creation: Jun 2010
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Handle: RePEc:iwh:dispap:15-10

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Keywords: intra-industry trade; trade and labor market interactions; unemployment;

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  1. Marius Brülhart & Robert Elliott, 2002. "Labour-market effects of intra-industry trade: Evidence for the United Kingdom," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(2), pages 207-228, June.
  2. Marius Brulhart & Michael Thorpe, 2000. "Intra-industry trade and adjustment in Malaysia: puzzling evidence," Applied Economics Letters, Taylor & Francis Journals, vol. 7(11), pages 729-733.
  3. Mary Lovely & Douglas Nelson, 2002. "Intra-industry trade as an indicator of labor market adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(2), pages 179-206, June.
  4. Joanne Kathryn Lindley & Marius Brullhart & Rob Elliott, 2005. "Intra-industry trade and labour market adjustment: A reassessment using data on individual workers," Working Papers 2005005, The University of Sheffield, Department of Economics, revised May 2005.
  5. Mark P. Moore & Priya Ranjan, 2005. "Globalisation vs Skill-Biased Technological Change: Implications for Unemployment and Wage Inequality," Economic Journal, Royal Economic Society, vol. 115(503), pages 391-422, 04.
  6. Özlem Onaran & Engelbert Stockhammer, 2006. "The effect of FDI and foreign trade on wages in the Central and Eastern European Countries in the post-transition era: A sectoral analysis," Department of Economics Working Papers wuwp094, Vienna University of Economics, Department of Economics.
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