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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.

Suggested Citation

  • Lovely, Mary E & Nelson, Douglas R, 2000. "Marginal Intraindustry Trade and Labor Adjustment," Review of International Economics, Wiley Blackwell, vol. 8(3), pages 436-447, August.
  • Handle: RePEc:bla:reviec:v:8:y:2000:i:3:p:436-47
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Joseph F. Francois & Douglas Nelson, 2002. "A Geometry Of Specialisation," Economic Journal, Royal Economic Society, vol. 112(481), pages 649-678, July.
    2. Mary Lovely & Douglas Nelson, 2002. "Intra-industry trade as an indicator of labor market adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), pages 179-206.
    3. Marius Brülhart & Robert Elliott, 2002. "Labour-market effects of intra-industry trade: Evidence for the United Kingdom," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), pages 207-228.
    4. ERLAT Guzin & ERLAT Haluk, "undated". "Intra-Industry Trade and Labour Market Adjustment in Turkey," EcoMod2003 330700049, EcoMod.
    5. Gãœzin Erlat & Haluk Erlat, 2003. "Measuring Intra-Industry and Marginal Intra-Industry Trade : The Case for Turkey," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 39(6), pages 5-38, November.
    6. Guzin Erlat & Haluk Erlat, 2006. "Intraindustry Trade and Labor Market Adjustment in Turkey: Another Piece of Puzzling Evidence?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 42(5), pages 5-27, October.
    7. Marius Brülhart, 2009. "An Account of Global Intra-industry Trade, 1962-2006," The World Economy, Wiley Blackwell, vol. 32(3), pages 401-459, March.
    8. 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, pages 1-20.
    9. Guzin Erlat & Haluk Erlat, 2006. "Intraindustry Trade and Labor Market Adjustment in Turkey: Another Piece of Puzzling Evidence?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 42(5), pages 5-27, October.
    10. David Greenaway & Michelle Haynes & Chris Milner, 2002. "Adjustment, employment characteristics and intra-industry trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), pages 254-276.
    11. Imre Ferto & Lionel J. Hubbard, 2001. "Intra-Industry Trade in Agri-Food Products between Hungary and EU," IEHAS Discussion Papers 0106, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    12. Nuno Carlos Leitão & Bogdan Dima & Dima (Cristea) Stefana, 2013. "Marginal Intra-industry Trade and Adjustment Costs in Labour Market," Working Papers 2013.39, Fondazione Eni Enrico Mattei.
    13. Güzin Erlat & Haluk Erlat, 2003. "Measuring Intra-Industry and Marginal Intra-Industry Trade : The Case for Turkey," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 39(6), pages 5-38, November.
    14. 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.

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