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Regional manufacturing employment volatility in Canada: The effects of specialisation and trade

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  • John Baldwin
  • W. Brown

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Abstract

This article tests whether diversity, growth, plant size, and export intensity are empirically related to manufacturing employment volatility levels across Canadian regions during the period 1976-1997. Using cross-sectional analysis, we indicate that the regions tending to be more stable are more diverse; they have lower-than-average growth rates, larger plant sizes and higher export intensity. First-difference analysis indicates that increases in diversity and export intensity are associated with decreased volatility in larger regions, but these variables have the opposite effect for smaller regions. The analysis also shows that in areas where trade has increased, ceteris paribus, plants have grown larger and diversity has decreased. The former tends to dampen volatility and the latter tends to magnify it. When these offsetting effects are taken into account, increased trade liberalisation is found to reduce volatility for large regions, but volatility increases in smaller manufacturing centres. Copyright Springer-Verlag Berlin/Heidelberg 2004

Suggested Citation

  • John Baldwin & W. Brown, 2004. "Regional manufacturing employment volatility in Canada: The effects of specialisation and trade," Economics of Governance, Springer, vol. 83(3), pages 519-541, July.
  • Handle: RePEc:spr:ecogov:v:83:y:2004:i:3:p:519-541
    DOI: 10.1007/s10110-004-0210-6
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    References listed on IDEAS

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    1. Baldwin, John R. & Dhaliwal, Naginder, 2000. "Labour Productivity Differences Between Domestic and Foreign-controlled Establishments in the Canadian Manufacturing Sector," Analytical Studies Branch Research Paper Series 2000118e, Statistics Canada, Analytical Studies Branch.
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    7. Attaran, Mohsen, 1986. "Industrial Diversity and Economic Performance in U.S. Areas," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 20(2), pages 44-54, July.
    8. Baldwin, John R. & Jarmin , Ron S. & Tang, Jianmin, 2002. "The Trend to Smaller Producers in Manufacturing: A Canada/U.S. Comparison," Economic Analysis (EA) Research Paper Series 2002003e, Statistics Canada, Analytical Studies Branch.
    9. Baldwin, John R. & Bian, Lin & Dupuy, Richard & Gellatly, Guy, 2000. "Failure Rates for New Canadian Firms: New Perspectives on Entry and Exit," Failure Rates for New Canadian Firms: New Perspectives on Entry and Exit, Statistics Canada, Economic Analysis Division, number stcb5e, February.
    10. Davis, Donald R., 1995. "Intra-industry trade: A Heckscher-Ohlin-Ricardo approach," Journal of International Economics, Elsevier, vol. 39(3-4), pages 201-226, November.
    11. John R. Kort, 1981. "Regional Economic Instability and Industrial Diversification in the U.S," Land Economics, University of Wisconsin Press, vol. 57(4), pages 596-608.
    12. Baldwin, John R. & Brown, W. Mark & Vinodrai, Tara, 2001. "Dynamics of the Canadian Manufacturing Sector in Metropolitan and Rural Regions," Analytical Studies Branch Research Paper Series 2001169e, Statistics Canada, Analytical Studies Branch.
    13. MacBean, A I & Nguyen, D T, 1980. "Commodity Concentration and Export Earnings Instability: A Mathematical Analysis," Economic Journal, Royal Economic Society, vol. 90(358), pages 354-362, June.
    14. Krugman, Paul R, 1981. "Intraindustry Specialization and the Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 959-973, October.
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    Cited by:

    1. Roberto Ezcurra, 2011. "Unemployment Volatility and Regional Specialization in the European Union," Regional Studies, Taylor & Francis Journals, vol. 45(8), pages 1121-1137.
    2. Jan Kluge, 2015. "Sectoral Diversification as Insurance against Economic Instability," ifo Working Paper Series 206, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    3. George Petrakos & Georgios Fotopoulos & Dimitris Kallioras, 2012. "Peripherality and integration: industrial growth and decline in the Greek regions," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 30(2), pages 347-361, April.
    4. Beaudry, Catherine & Schiffauerova, Andrea, 2009. "Who's right, Marshall or Jacobs? The localization versus urbanization debate," Research Policy, Elsevier, vol. 38(2), pages 318-337, March.
    5. Page, Marjorie L., 2002. "Rural Diversification 1981 - 1996," Agriculture and Rural Working Paper Series 28046, Statistics Canada.
    6. Georgios Fotopoulos & Dimitris Kallioras & George Petrakos, 2010. "Spatial variations of Greek manufacturing employment growth: The effects of specialization and international trade," Papers in Regional Science, Wiley Blackwell, vol. 89(1), pages 109-133, March.
    7. Koen Frenken & Frank G. van Oort & Thijs Verburg & Ron A. Boschma, 2004. "Variety and regional economic growth in the Netherlands," Papers in Evolutionary Economic Geography (PEEG) 0502, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Dec 2004.
    8. Ben Salha, Ousama, 2013. "Does economic globalization affect the level and volatility of labor demand by skill? New insights from the Tunisian manufacturing industries," Economic Systems, Elsevier, vol. 37(4), pages 572-597.
    9. Richard V. Adkisson & Eduardo Saucedo, 2010. "Merchandise Exports and Job Quality, Evidence From the States," Economic Development Quarterly, , vol. 24(3), pages 231-242, August.
    10. Baldwin, John R. & Beckstead, Desmond & Gellatly, Guy, 2005. "Canada's Investments in Science and Innovation: Is the Existing Concept of Research and Development Sufficient?," Economic Analysis (EA) Research Paper Series 2005032e, Statistics Canada, Analytical Studies Branch.
    11. J├╝rgen Essletzbichler, 2005. "Diversity, stability and regional growth in the U.S. (1975-2002)," Papers in Evolutionary Economic Geography (PEEG) 0513, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Sep 2005.

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