Intra-industry Trade and Labour Market Adjustment in France
According to the “smooth adjustment hypothesis”, the labor market adjustment costs entailed by trade liberalization are lower if trade expansion is intra industry rather inter industry in nature. In this paper, we study the link between trade and labor-market changes in France over the period 1986-2011. The empirical survey, uses a panel data models with fixed effects, it showes a negative correlation between changes of employment and marginal intra-industry trade. These results confirm the smooth adjustment hypothesis. The mesure of marginal IIT is then found to be more appropriate for the analysis of adjustment issues than the traditional static IIT index.
