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Please use this identifier to cite or link to this item: http://hdl.handle.net/10400.5/2322

Title: The Portuguese intra-industry trade and the labor market adjustment costs: The SAH Again
Authors: Faustino, Horácio C.
Leitão, Nuno Carlos
Keywords: Adjustment costs
dynamic panel data
labor market
marginal intra-industry trade
smooth adjustment hypothesis
Issue Date: 2010
Publisher: ISEG - Departamento de economia
Citation: Faustino, Horácio C., e Nuno Carlos Leitão. 2010. "The Portuguese intra-industry trade and the labor market adjustment costs: The SAH Again". Instituto Superior de Economia e Gestão - DE Working papers nº 8-2010/DE/SOCIUS
Series/Report no.: DE Working papers;nº 8-2010/DE/SOCIUS
Abstract: This paper provides an empirical test of the SAH (Smooth Adjustment Hypothesis) using data from Portugal. According to SAH, intra-industry trade leads to relatively lower adjustment costs in comparison to inter-industry trade. The paper tests the SAH by using a dynamic panel data analysis that takes into account lagged effects of changes in the MIIT (Marginal Intra-Industry Trade) index. The regressions use the absolute change in the total employment in a given industry as a proxy for trade adjustment costs. The main results imply that a higher MIIT leads to lower adjustment costs in the same year. More specifically, the coefficients of the MIIT index are negative and statistically significant in all regressions. These results provide support for the SAH. In addition, the coefficients of the lagged MIIT indicators (one or two period) are mostly positive but not significant throughout. These findings highlight the importance of lagged trade indicators in affecting labor reallocation outcomes and thus adjustment costs.
URI: http://hdl.handle.net/10400.5/2322
ISSN: 0874-4548
Publisher version: http://aquila2.iseg.utl.pt/aquila/getFile.do?method=getFile&fileId=119868
Appears in Collections:SOCIUS - Documentos de Trabalho / SOCIUS - Working Papers
DE - Documentos de trabalho / Working Papers

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