Estimating the Wage Costs of Inter- and Intra-Sectoral Adjustment

34 Pages Posted: 26 Mar 2001

See all articles by Michelle Haynes

Michelle Haynes

University of Nottingham

Richard Upward

University of Nottingham - School of Economics

Peter W Wright

University of Sheffield - Department of Economics

Date Written: February 2001

Abstract

The proposition that labour market adjustments to intra-industry trade are less costly than adjustments to inter-industry trade is a widely-held belief amongst trade economists. If it is the case that there are significant sector-specific skills, then this "smooth adjustment hypothesis" seems intuitive. However, direct evidence relating to this issue remains largely anecdotal. In this Paper we adopt the methodology of the micro-econometric labour literature to estimate the returns to tenure within firms, industries and occupations in order to predict the costs, in terms of wage losses, of moving jobs between and within sectors. To do this we use a large panel of individual workers for the UK over a long period (1975-1998), which enables us to control for unobserved fixed effects which may jointly determine the propensity to move jobs and the wage level.

Keywords: Industry specific skills, mobility, smooth adjustment, tenure, wages

JEL Classification: C33, F16, J30, J62

Suggested Citation

Haynes, Michelle and Upward, Richard and Wright, Peter W, Estimating the Wage Costs of Inter- and Intra-Sectoral Adjustment (February 2001). Available at SSRN: https://ssrn.com/abstract=264363

Michelle Haynes (Contact Author)

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

Richard Upward

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom
+44 115 951 5151 (Phone)
+44 115 951 4159 (Fax)

Peter W Wright

University of Sheffield - Department of Economics ( email )

9 Mappin Street
Sheffield, S1 4DT
UNITED KINGDOM

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