Reconsidering Adjustment Costs of the Association Agreement. The Case of Hungarian Food Industry
The structure of Hungary's food trade expansion over the transition period 1995-2003 and its implications for labour-market adjustment is examined. An econometric analysis of trade and employment data suggests that changes in domestic consumption and productivity have significant influence on employment changes. Market concentration has strong positive and significant effects, while FDI has no influence on the employment changes. Our results do not provide clear support for the smooth-adjustment hypothesis of intra-industry trade. However, our results should be interpreted only with care due to sensitivity on the choice of period and lag structure.
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