Dynamics of Intraindustry Trade and Labor-Market Adjustment
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. Copyright 2000 by Blackwell Publishing Ltd.
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Volume (Year): 8 (2000)
Issue (Month): 3 (August)
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