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Marginal Intra-industry Trade and Adjustment Costs in Labour Market

Author

Listed:
  • Nuno Carlos Leitão

    (ESGTS, Polytechnic Institute of Santarém, CEFAGE, Évora University)

  • Bogdan Dima

    (West University of Timisoara, Faculty of Economics and Business Administration, Finance Department)

  • Dima (Cristea) Stefana

    (Vasile Goldis Western University of Arad)

Abstract

The objective of this study is to provide some empirical evidences on the existence of labor market adjustments according to smooth adjustment hypothesis (SAH) under the impact of intra-industry trade (IIT) considering the Portuguese case over a time span between 1995 and 2006. The main methodological issue of this study consists in showing that it is preferable to use the GMM-System approach with orthogonal transformation of data. The key outcome consists in highlighting a negative linkage between marginal intra-industry trade and the amplitude of employment changes for this particular market. In addition, we find a negative correlation between changes of employment and changes in domestic consumption. Moreover, the relationship between growth of productivity and market structure is according to smooth adjustment hypothesis.

Suggested Citation

  • 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.
  • Handle: RePEc:fem:femwpa:2013.39
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    References listed on IDEAS

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    1. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    7. 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.
    8. Guzin Erlat & Haluk Erlat, 2006. "Intraindustry Trade and Labor Market Adjustment in Turkey: Another Piece of Puzzling Evidence?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 42(5), pages 5-27, October.
    9. Imre Ferto, 2009. "Labour Market Adjustment and Intra-Industry Trade: The Effects of Association on the Hungarian Food Industry," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(3), pages 668-681.
    10. Windmeijer, Frank, 2000. "Moment conditions for fixed effects count data models with endogenous regressors," Economics Letters, Elsevier, vol. 68(1), pages 21-24, July.
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    Cited by:

    1. Tiago Pereira, 2016. "The effect of developing countries' competition on regional labour markets in Portugal," GEE Papers 0058, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Mar 2016.

    More about this item

    Keywords

    Intra-Industry Trade; Adjustment Costs; Portugal; Labour Market;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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