IDEAS home Printed from https://ideas.repec.org/a/ids/ijecbr/v4y2012i1-2p1-20.html
   My bibliography  Save this article

US manufacturing and vertical/horizontal intra-industry trade: examining the smooth adjustment hypothesis

Author

Listed:
  • Roger White
  • Cheng Chen

Abstract

Using data that represent the six-digit North American Industrial Classification System-classified industries that comprise the US manufacturing sector and that span the years 1989–2005, we test the validity of the smooth adjustment hypothesis (SAH). To our knowledge, this is the first examination of the SAH for the USA. The results of our empirical analysis are consistent with the confirmation of the SAH. Further, using measures of vertical marginal intra-industry trade and of horizontal marginal intra-industry trade, we find that the latter has a stronger effect on employment of production workers than does the former. The findings suggest that for total industry-level employment and for industry-level production worker employment, intra-industry trade expansion inherently involves lower adjustment costs as compared to inter-industry trade expansion.

Suggested Citation

  • 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, vol. 4(1/2), pages 1-20.
    • Handle: RePEc:ids:ijecbr:v:4:y:2012:i:1/2:p:1-20
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=44241
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Marius Brülhart & Robert J. R. Elliott & Joanne Lindley, 2006. "Intra-Industry Trade and Labour-Market Adjustment: A Reassessment Using Data on Individual Workers," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(3), pages 521-545, October.
    2. Clive Hamilton & Paul Kniest, 1991. "Trade liberalisation, structural adjustment and intra-industry trade: A note," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 127(2), pages 356-367, June.
    3. Horácio Faustino & Nuno Leitão, 2009. "Intra-industry trade and labor costs: The smooth adjustment hypothesis," Working Papers Department of Economics 2009/17, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    4. Chonira Aturupane & Simeon Djankov & Bernard Hoekman, 1999. "Horizontal and vertical intra-industry trade between Eastern Europe and the European union," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 135(1), pages 62-81, March.
    5. David Greenaway & Robert Hine & Chris Milner & Robert Elliott, 1994. "Adjustment and the measurement of marginal intra-industry trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 130(2), pages 418-427, June.
    6. Marius Brülhart, 1994. "Marginal intra-industry trade: Measurement and relevance for the pattern of industrial adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 130(3), pages 600-613, September.
    7. 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), vol. 138(2), pages 207-228, June.
    8. Robert J. R. Elliott & Joanne K. Lindley, 2006. "Trade, Skills and Adjustment Costs: A Study of Intra‐Sectoral Labor Mobility," Review of Development Economics, Wiley Blackwell, vol. 10(1), pages 20-41, February.
    9. 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.
    10. 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.
    11. Greenaway, David & Hine, Robert C. & Wright, Peter, 1999. "An empirical assessment of the impact of trade on employment in the United Kingdom," European Journal of Political Economy, Elsevier, vol. 15(3), pages 485-500, September.
    12. Manuel Cabral & Joana Silva, 2006. "Intra-Industry Trade Expansion and Employment Reallocation between Sectors and Occupations," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(3), pages 496-520, October.
    13. Greenaway, David & Hine, Robert C & Milner, Chris, 1995. "Vertical and Horizontal Intra-industry Trade: A Cross Industry Analysis for the United Kingdom," Economic Journal, Royal Economic Society, vol. 105(433), pages 1505-1518, November.
    14. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
    15. Brulhart, Marius, 2000. "Dynamics of Intraindustry Trade and Labor-Market Adjustment," Review of International Economics, Wiley Blackwell, vol. 8(3), pages 420-435, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nuno Carlos Leitão & Henrique Freixa Braz & Pedro Oliveira, 2022. "Revisiting Marginal Intra-Industry Trade and Portuguese Labour Market," Evaluation Review, , vol. 46(3), pages 336-359, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sakshi Aggarwal & Debashis Chakraborty, 2020. "Labour Market Adjustment and Intra-Industry Trade: Empirical Results from Indian Manufacturing Sectors," Journal of South Asian Development, , vol. 15(2), pages 238-269, August.
    2. Abdul K. M. Azhar & Robert J. R. Elliott, 2008. "On the Measurement of Changes in Product Quality in Marginal Intra-Industry Trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(2), pages 225-247, July.
    3. Saeed Rasekhi & Saman Ghaderi, 2012. "Marginal intra-industry trade and adjustment costs: the case study of Iran’s manufacturing industries," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 4(1/2), pages 35-43.
    4. Sakshi Aggarwal & Debashis Chakraborty, 2020. "Is there any relationship between Marginal Intra-Industry Trade and Employment Change? Evidence from Indian Industries," Working Papers 2044, Indian Institute of Foreign Trade.
    5. Tadashi Ito & Toshihiro Okubo, 2016. "Product Quality And Intra-Industry Trade," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(04), pages 1-22, September.
    6. Horácio Faustino & Nuno Leitão, 2009. "Intra-industry trade and labor costs: The smooth adjustment hypothesis," Working Papers Department of Economics 2009/17, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    7. Nuno Carlos Leitão & Henrique Freixa Braz & Pedro Oliveira, 2022. "Revisiting Marginal Intra-Industry Trade and Portuguese Labour Market," Evaluation Review, , vol. 46(3), pages 336-359, June.
    8. Abdul Azhar & Robert Elliott, 2011. "A Measure of Trade Induced Adjustment in Volume and Quality Space," Open Economies Review, Springer, vol. 22(5), pages 955-968, November.
    9. Varma, Poornima & Issar Akash, 2017. "Intra-Industry Trade and Labour Market Adjustment: Indian Manufacturing Sector," IIMA Working Papers WP 2017-04-01, Indian Institute of Management Ahmedabad, Research and Publication Department.
    10. ERLAT Guzin & ERLAT Haluk, 2010. "Intra-Industry Trade and Labour Market Adjustment in Turkey," EcoMod2003 330700049, EcoMod.
    11. Mónica Rivera, 2014. "Trade patterns in the process of European integration: Evidence for the intraindustrial exchanges of a Mediterranean peripheral region," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(1), pages 227-249, January.
    12. Hayakawa, Kazunobu & Ito, Tadashi & Okubo, Toshihiro, 2017. "On the stability of intra-industry trade," Journal of the Japanese and International Economies, Elsevier, vol. 45(C), pages 1-12.
    13. Azhar A. KM & Elliott Rob J. & Liu Junting, 2012. "Product Quality, Trade, and Adjustment: The China-ASEAN Experience," Global Economy Journal, De Gruyter, vol. 12(2), pages 1-28, June.
    14. Imre Ferto & Károly Attila Soos, 2008. "Marginal Intra-Industry Trade and Adjustment Costs - A Hungarian-Polish Comparison," CERS-IE WORKING PAPERS 0815, Institute of Economics, Centre for Economic and Regional Studies.
    15. Valerija Botrić, 2013. "Determinants of Intra-industry Trade between Western Balkans and EU-15: Evidence from Bilateral Data," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 6(2), pages 7-23, September.
    16. Zeddies, Götz, 2010. "International Trade Patterns and Labor Markets – An Empirical Analysis for EU Member States," IWH Discussion Papers 15/2010, Halle Institute for Economic Research (IWH).
    17. Goetz Zeddies, 2012. "International trade patterns and labour markets – an empirical analysis for EU member states," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 4(1/2), pages 96-115.
    18. Imre Ferto & Lionel J. Hubbard, 2001. "Intra-Industry Trade in Agri-Food Products between Hungary and EU," CERS-IE WORKING PAPERS 0106, Institute of Economics, Centre for Economic and Regional Studies.
    19. Luka, Oksana & Levkovych, Inna, 2004. "Intra-industry trade in agricultural and food products: the case of Ukraine," IAMO Discussion Papers 78, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).
    20. 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.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijecbr:v:4:y:2012:i:1/2:p:1-20. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=310 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.