Nottingham Centre for Research on
Globalisation and Economic Policy (GEP)

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.

This paper is available in PDF format .

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