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Intra-Industry Trade and Labour-Market Adjustment: A Reassessment Using Data on Individual Workers

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  • Marius Brülhart

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  • Robert J. R. Elliott
  • Joanne Lindley

Abstract

We re-examine the relationship between intra-industry trade and labour reallocation, using individual-level data on manufacturing worker moves in the United Kingdom. The contribution of this analysis is twofold. First, we estimate the impact of intra-industry trade on worker moves between occupations as well as between industries. Second, we run individual-level regressions that allow us to control for worker heterogeneity. Our results suggest that intra-industry trade does have the stipulated attenuating effect on worker moves, both between occupations and between industries, but that this effect is relatively small compared to other determinants of labour reallocation.
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Suggested Citation

  • 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.
  • Handle: RePEc:spr:weltar:v:142:y:2006:i:3:p:521-545
    DOI: 10.1007/s10290-006-0079-3
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    References listed on IDEAS

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    1. R J R Elliott & J Lindley, 2003. "Trade, Skills and Adjustment Costs: A Study of Intra-Sectoral Labour Mobility in the UK," The School of Economics Discussion Paper Series 0312, Economics, The University of Manchester.
    2. Neal, Derek, 1995. "Industry-Specific Human Capital: Evidence from Displaced Workers," Journal of Labor Economics, University of Chicago Press, vol. 13(4), pages 653-677, October.
    3. Robert J. R. Elliott & Joanne Lindley, 2006. "Skill Specificity And Labour Mobility: Occupational And Sectoral Dimensions," Manchester School, University of Manchester, vol. 74(3), pages 389-413, June.
    4. Dolton, Peter J & Kidd, Michael P, 1998. "Job Changes, Occupational Mobility and Human Capital Acquisition: An Empirical Analysis," Bulletin of Economic Research, Wiley Blackwell, vol. 50(4), pages 265-295, October.
    5. Abdul Azhar & Robert Elliott, 2003. "On the measurement of trade-induced adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 139(3), pages 419-439, September.
    6. Fallick, Bruce Chelimsky, 1993. "The Industrial Mobility of Displaced Workers," Journal of Labor Economics, University of Chicago Press, vol. 11(2), pages 302-323, April.
    7. 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), vol. 138(2), pages 179-206, June.
    8. Brecher, Richard A. & Choudhri, Ehsan U., 1994. "Pareto gains from trade, reconsidered : Compensating for jobs lost," Journal of International Economics, Elsevier, vol. 36(3-4), pages 223-238, May.
    9. Shin, Kwanho, 1997. "Inter- and Intrasectoral Shocks: Effects on the Unemployment Rate," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 376-401, April.
    10. 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.
    11. Michelle Haynes & Richard Upward & Peter Wright, 2002. "Estimating the wage costs of inter- and intra- sectoral adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(2), pages 229-253, June.
    12. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-338, May.
    13. Greenaway, David & Upward, Richard & Wright, Peter, 2000. "Sectoral Transformation and Labour-Market Flows," Oxford Review of Economic Policy, Oxford University Press, vol. 16(3), pages 57-75, Autumn.
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    Cited by:

    1. 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), Eastern Macedonia and Thrace Institute of Technology (EMATTECH), Kavala, Greece, vol. 6(2), pages 7-23, September.
    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. 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.
    5. 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.
    6. 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.
    7. 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.
    8. David Greenaway & Chris R. Milner, 2006. "Recent Developments in Intra-Industry Trade: Introduction by Guest Editors," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(3), pages 425-432, October.
    9. repec:eee:jeeman:v:83:y:2017:i:c:p:50-67 is not listed on IDEAS
    10. 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.
    11. Ito, Tadashi & Okubo, Toshihiro, 2014. "Product quality and intra-industry trade," IDE Discussion Papers 478, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    12. 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.
    13. repec:eee:jjieco:v:45:y:2017:i:c:p:1-12 is not listed on IDEAS
    14. 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.
    15. 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.
    16. 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.
    17. Roy, Jayjit, 2017. "On the environmental consequences of intra-industry trade," Journal of Environmental Economics and Management, Elsevier, vol. 83(C), pages 50-67.
    18. 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).
    19. 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.
    20. World Bank, 2010. "Ukraine - Country Economic Memorandum : Strategic Choices to Accelerate and Sustain Growth," World Bank Other Operational Studies 2905, The World Bank.
    21. Imre Ferto & Károly Attila Soos, 2008. "Marginal Intra-Industry Trade and Adjustment Costs - A Hungarian-Polish Comparison," IEHAS Discussion Papers 0815, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    22. Arora, Tarun, 2015. "Employment-Export Elasticities for the Indian Textile Industry," Working Papers 349, Institute for Social and Economic Change, Bangalore.

    More about this item

    Keywords

    Intra-industry trade; worker mobility; labour-market adjustment;

    JEL classification:

    • F1 - International Economics - - Trade
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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