Intra-Industry Trade and Labour Market Adjustment in the Automobile Industry

Abstract

This paper examines the effects of increased intra-industry trade on the labour market adjustment costs in Portugal's automobile industry. Using a static and dynamic panel data approach, the results show a negative correlation between changes of employment and marginal intra-industry trade. These results confirm the smooth adjustment hypothesis, as well as suggesting that the multinational companies (MNC) engaged in the automobile sector have low adjustment costs if they increase the intra-firm trade, that is, the trade in automobile components between different units of MNCs.

Comercio intra-industrial y variaciones del empleo en la industria colombiana, 1991-2015

“…puede inducir a una reducción de mano de obra y por lo tanto a que se desplacen los individuos a otros sectores económicos, es decir que se presenta una relocalización de mano de obra y por lo tanto mayores costos de ajuste (Brülhart y Thorpe 2000;Ferto 2009;Faustino 2010;Rasekhi y Ghaderi, 2012). Segundo, el aumento de la productividad sectorial ( )…”

Revisiting Marginal Intra-Industry Trade and Portuguese Labour Market

“…H6: Wages tend to decrease when employment increases. Greenaway et al (2020), Faustino and Leitão (2012) and Aggarwal and Chakraborty (2020) consider a negative sign between wages and employment changes (β 6 LogΔWages<0).…”

“…When we achieved a meta-analysis, we observed that two types of empirical studies were developed: static models, where the authors did not use the lagged variable of employment changes (Cabral and Silva 2006;Brülhart et al 2006;White and Chen 2012;Rasekhi and Ghaderi 2012); and the second type of studies where the authors used the lagged variable of employment (Aggarwal and Chakraborty 2020;Erlat and Erlat 2006;Faustino 2010;Faustino and Leitão 2012;Pinto et al 2019;Thorpe and Leitão 2012). Furthermore, it should be referred that not all studies confirm the hypothesis SAH (smooth adjustment hypothesis).…”

“…Table 11 depicts the results using the Method of Moments Quantile Regression (MMQR) suggested by Machado and Silva (2019). We use the lagged variable of employment changes to assess long-run effects, following previous empirical studies such as Thorpe and Leitão (2012), Faustino and Leitão (2012), Aggarwal and Chakraborty (2020) and Pinto et al (2019) to assess the hypothesis of SAH. According to our results, the lagged variable of employment changes presents a positive sign in the three quantiles and is statistically significant at the 1% level.…”

“…It is observed that there are studies applied to several countries such as Brülhart and Thorpe (2000) for Malaysia, in the case of Ireland; Brülhart (2000) and Brülhart and Elliot (2002) for the United Kingdom stand out; in Turkey, Erlat and Erlat (2006); for the Portuguese case Cabral and Silva (2006), Faustino (2010) and Faustino and Leitão (2012); Thorpe and Leitão (2012) for Australia; and more recently, the study by Pinto et al (2019) for Brazil and Aggarwal and Chakraborty (2020) for the Indian case.…”