Weltwirtschaftliches Archiv

, Volume 138, Issue 2, pp 207–228 | Cite as

Labour-market effects of intra-industry trade: Evidence for the United Kingdom

  • Marius Brülhart
  • Robert J. R. Elliott


Labor-Market Effects of Intra-Industry Trade: Evidence for the United Kingdom. — According to the “smooth adjustment hypothesis”, the labor-market adjustment costs entailed by trade liberalization are lower if trade expansion is intra-industry rather than inter-industry in nature. In this paper, we study the link between trade and labor market changes in UK manufacturing industries during the 1980s. We use industry-level measures of unemployment duration and wage variability as proxies for adjustment costs, and we relate them to various measures of intra-industry trade. Our evidence offers some support for the smooth adjustment hypothesis.

F1 J6 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Abd-El-Rahman, K. (1991). Firms’ Competitive and National Comparative Advantages as Joint Determinants of Trade Composition.Weltwirtschaftliches Archiv 127 (1): 83–97.CrossRefGoogle Scholar
  2. Andersson, L., O. Gustafsson, and L. Lundberg (2000). Structural Change, Competition and Job. Turnover in the Swedish Manufacturing Industry 1964-96.Review of International Economics 8 (3): 566–582.CrossRefGoogle Scholar
  3. Bale, M. D. (1976). Estimates of Trade Displacement Costs for US Workers.Journal of International Economics 6 (3): 245–250.CrossRefGoogle Scholar
  4. Baldwin, R. E., J. H. Mutti, and J. Richardson (1980). Welfare Effects on the United States of a Significant Multilateral Tariff Reduction.Journal of International Economics 10 (3): 405–423.CrossRefGoogle Scholar
  5. Brecher, R. A., and E. U. Choudhri (1994). Pareto Gains from Trade Reconsidered: Compensating for Jobs Lost.Journal of International Economics 36 (3/4): 223–238.CrossRefGoogle Scholar
  6. Brülhart, M. (1994). Marginal Intra-Industry Trade: Measurement and Relevance for the Pattern of Industrial Adjustment.Weltwirtschaftliches Archiv 130 (3): 600–613.CrossRefGoogle Scholar
  7. Brülhart, M. (2000). Dynamics of Intraindustry Trade and Labor-Market Adjustment.Review of International Economics 8 (3): 420–435.CrossRefGoogle Scholar
  8. Brülhart, M. (2002). Marginal Intra-Industry Trade: Towards a Measure of Non-Disruptive Trade Expansion. In P. S. Lloyd and H.-H. Lee (eds.),Frontiers of Research in Intra-Industry Trade. Basingstoke: Palgrave Macmillan.Google Scholar
  9. Brülhart, M., and R. C. Hine (1999).Intra-Industry Trade and Adjustment: The European Experience. London: Macmillan.Google Scholar
  10. Campbell, C. M. (1989). Sectoral Wage Rigidity in the Canadian and French Economies.European Economic Review 33 (9): 1727–1749.CrossRefGoogle Scholar
  11. Davidson, C., and S. J. Matusz (2001). Globalization, Employment and Income: Analyzing the Adjustment Process. University of Nottingham, Leverhulme Centre for Research on Globalization and Economic Policy, CEP Research Paper 2001/04.Google Scholar
  12. Dixit, A., and V. Norman (1986). Gains from Trade without Lump-Sum Compensation.Journal of International Economics 21 (1): 111–122.CrossRefGoogle Scholar
  13. Elliott, R. J. R., D. Greenaway, and R. C. Hine. (2000) Tests for Factor Homogeneity and Industry Classification.Weltwirtschaftliches Archiv 136(2): 355–371.CrossRefGoogle Scholar
  14. Feenstra, R. C., and T. R. Lewis (1994). Trade Adjustment Assistance and Pareto Gains from Trade.Journal of International Economics 36 (3): 201–222.CrossRefGoogle Scholar
  15. Falvey, R. E. (1981). Commercial Policy and Intra-Industry Trade.Journal of International Economics 11 (4): 495–511.CrossRefGoogle Scholar
  16. Greenaway, D., and C. Milner (1986).The Economics of Intra-Industry Trade. Oxford: Basil Blackwell.Google Scholar
  17. Greenaway, D., and R. C. Hine (1991). Intra-Industry Specialization, Trade Expansion and Adjustment in the European Economic Space.Journal of Common Market Studies 29 (6): 603–622.CrossRefGoogle Scholar
  18. Greenaway, D., R. C. Hine, and C. Milner (1994a). Country-Specific Factors and the Pattern of Horizontal and Vertical Intra-Industry Trade in the UK.Weltwirtschaftliches Archiv 130 (1): 77–100.CrossRefGoogle Scholar
  19. Greenaway, D., R. C. Hine, C. Milner, and R. J. R. Elliott (1994b). Adjustment and the Measurement of Marginal Intra-Industry Trade.Weltwirtschaftliches Archiv 130 (2): 418–427.CrossRefGoogle Scholar
  20. Greenaway, D., R. C. Hine, and C. Milner (1995). Vertical and Horizontal Intra-Industry Trade: A Cross Industry Analysis for the United Kingdom.Economic Journal 105 (November): 1505–1518.CrossRefGoogle Scholar
  21. Hamermesh, D. S. (1989). What Do We Know About Worker Displacement in the United States?Industrial Relations 28 (1): 51–59.Google Scholar
  22. Hamilton, C., and P. Kniest (1991). Trade Liberalization, Structural Adjustment and Intra-Industry Trade: A Note.Weltwirtschaftliches Archiv 12 (2): 356–367.CrossRefGoogle Scholar
  23. Haynes, M., R. Upward, and P. Wright (2000). Smooth and Sticky Adjustment: A Comparative Analysis of the US and UK.Review of International Economics 8 (3): 517–532.CrossRefGoogle Scholar
  24. Haynes, M., R. Upward, and P. Wright (2002). Estimating the Wage Costs of Inter- and Intra-Sectoral Adjustment.Weltwirtschaftliches Archiv, this issue.Google Scholar
  25. Helpman, E., and P. Krugman (1985).Market Structure and Foreign Trade. Cambridge: MIT Press.Google Scholar
  26. Hildreth, A., and S. Pudney (1998). Econometric Issues in the Analysis of Linked Cross-Section Employer-Worker Surveys. Discussion Paper 98-3. Department of Economics, University of Leicester.Google Scholar
  27. Jacobson, L. S., R. J. LaLonde, and D. G. Sullivan (1993). Earnings Losses of Displaced Workers.American Economic Review 83 (4): 685–709.Google Scholar
  28. Kletzer, L. G. (1998). Job Displacement.Journal of Economic Perspectives 12 (1): 115–136.Google Scholar
  29. Lovely, M., and D. Nelson (2000). Marginal Intraindustry Trade and Labour Adjustment.Review of International Economics 8 (3): 436–447.CrossRefGoogle Scholar
  30. Lundberg, L., and P. Hansson (1986). Intra-Industry Trade and Its Consequences for Adjustment. In D. Greenaway and P. K. M. Tharakan (eds.),Imperfect Competition and International Trade. Brighton: Wheatsheaf.Google Scholar
  31. Mutti, J. (1978). Aspects of Unilateral Trade Policy and Factor Adjustment Costs.Review of Economics and Statistics 60 (1): 102–110.CrossRefGoogle Scholar
  32. Oliveras, J., and I. Terra (1997). Marginal Intra-Industry Trade Index: The Period and Aggregation Choice.Weltwirtschaftliches Archiv 133 (1): 170–179.CrossRefGoogle Scholar
  33. Shin, K. (1997). Inter- and Intrasectoral Shocks: Effects on the Unemployment Rate.Journal of Labor Economics 15 (2): 376–401.CrossRefGoogle Scholar
  34. Slaughter, M. (1999). Globalization and Wages: A Tale of Two Perspectives.World Economy 22 (5): 609–630.CrossRefGoogle Scholar
  35. Takacs, W. E., and A. Winters (1991). Labour Adjustment Costs and British Footwear Protection.Oxford Economic Papers 43 (3): 479–501.Google Scholar
  36. Thursby, J. G., and P. Schmidt (1977). Some Properties of Tests for Specification Error in a Linear Regression Model.Journal of the American Statistical Association 72 (359): 635–641.CrossRefGoogle Scholar

Copyright information

© Institut fur Weltwirtschaft an der Universitat Kiel 2002

Authors and Affiliations

  • Marius Brülhart
  • Robert J. R. Elliott

There are no affiliations available

Personalised recommendations