Analysis Of Influences On The Labor Market Adjustment Cost From The Intra-Industry

With the continuous development of trade liberalization, the trade form has had the huge change and intra-industry trade gradually replace the traditional inter-industry trade. Since China’s reform and opening policy, the foreign trade has leapt forward as well as the domestic economy. But at the same time, the adjustment cost issues that trade liberalization brings are becoming increasingly notable. How to reduce flowing cost of the essential factors in the process of globalization becomes a main problem. At present, it is generally accepted that if resources flow in the internal industry, the adjust cost is relatively low, namely the theory "smooth adjustment hypothesis".The research on smooth adjustment hypothesis theory in developing countries is very few, and much less on China. In order to test the smooth adjustment hypothesis, this paper study the relationship between intra-industry trade and trade adjustment cost by using the panel data of China’s22manufacturing segmentation industries. The crucial difference from the other articles is in the choice of variables, taking the diversity and lag effect of the variables into consideration. This paper separately using the interval one year, two years, three years of the marginal intra-industry trade index to carry out a contrast. Through the theoretical and empirical research, this paper found that smooth adjustment hypothesis has no adaptability in China. In other words, as the intra-industry trade level increases, the flow of labor between inter industries is more significant. The labor productivity and domestic consumption have a great influence on the labor flow. But as the intra-industry trade scale expends, the adjustment of labor increases. At the same time, the marginal intra-industry trade index MIIT is more effectively than the traditional intra-industry trade index IIT, and both indexes have hysteresis effect on the labor adjustment. Therefore, this paper proposes that although intra-industry adjustment for individual is easier, the intra industry form is not inevitable in promoting the labor flow due to some reason such as china’s being in the process of system transformation.