GEP Research Paper 00/21
Labour-Market Effects of Intra-Industry Trade: Evidence for the United Kingdom
Marius Brülhart and Rob Elliott
Abstract
According to the "smooth adjustment hypothesis", the labour-market adjustment costs entailed by trade liberalisation are lower if trade expansion is intra-industry rather than inter-industry in nature. In this paper, we study the link between trade and labour-market changes in UK manufacturing industries during the 1980s. We use industry-level measures of unemployment duration and wage flexibility as proxies for adjustment costs, and we relate them to various measures of intra-industry trade. Our evidence supports the smooth adjustment hypothesis.
Issued in December 2000.
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