The adjustment cost of the Association Agreement in the Hungarian food industry

The article examines the structure of Hungary's food trade expansion over the 1995- 2003 transition period and its implications for labour-market adjustment. An econometric analysis of trade and employment data suggests that changes in domestic consumption and productivity have significant influence on employment changes. Strong positive and significant effects on these are also exerted by market concentration, while FDI has no influence on them. The results do not provide clear support for the smooth-adjustment hypothesis of intra-industry trade. However, the results should be interpreted with care, due to sensitivity to choice of period and lag structure.