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

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

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Article provided by Springer in its journal Papers in Regional Science.

Volume (Year): 83 (2004)
Issue (Month): 3 (07)
Pages: 519-541

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Handle: RePEc:spr:presci:v:83:y:2004:i:3:p:519-541
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  1. Attaran, Mohsen, 1986. "Industrial Diversity and Economic Performance in U.S. Areas," The Annals of Regional Science, Springer, vol. 20(2), pages 44-54, July.
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  8. 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, number stcb5e, December.
  9. Head, Keith & Ries, John, 1999. "Rationalization effects of tariff reductions," Journal of International Economics, Elsevier, vol. 47(2), pages 295-320, April.
  10. Dhaliwal, Naginder & Baldwin, John R., 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.
  11. Brown, W. Mark & Vinodrai, Tara & Baldwin, John R., 2001. "Dynamics of the Canadian Manufacturing Sector in Metropolitan and Rural Regions," Analytical Studies Branch Research Paper Series 2001169e, Statistics Canada, Analytical Studies Branch.
  12. Krugman, Paul R, 1981. "Intraindustry Specialization and the Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 959-73, October.
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