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US manufacturing and vertical/horizontal intra-industry trade: examining the smooth adjustment hypothesis

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  • Roger White
  • Cheng Chen

Abstract

Using data that represent the six-digit North American Industrial Classification System-classified industries that comprise the US manufacturing sector and that span the years 1989–2005, we test the validity of the smooth adjustment hypothesis (SAH). To our knowledge, this is the first examination of the SAH for the USA. The results of our empirical analysis are consistent with the confirmation of the SAH. Further, using measures of vertical marginal intra-industry trade and of horizontal marginal intra-industry trade, we find that the latter has a stronger effect on employment of production workers than does the former. The findings suggest that for total industry-level employment and for industry-level production worker employment, intra-industry trade expansion inherently involves lower adjustment costs as compared to inter-industry trade expansion.

Suggested Citation

  • Roger White & Cheng Chen, 2012. "US manufacturing and vertical/horizontal intra-industry trade: examining the smooth adjustment hypothesis," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 4(1/2), pages 1-20.
    • Handle: RePEc:ids:ijecbr:v:4:y:2012:i:1/2:p:1-20
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    References listed on IDEAS

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    1. Marius Brülhart & Robert J. R. Elliott & Joanne Lindley, 2006. "Intra-Industry Trade and Labour-Market Adjustment: A Reassessment Using Data on Individual Workers," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(3), pages 521-545, October.
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