Decomposing the Automotive Supply Chain: Employment, Value Added and Occupational Structure

Abstract

This paper studies the automotive supply chain in four European countries (Germany, France, UK and Italy) between 2000 and 2014. First, employing WIOD data processed via Trade-SCAN, we decompose the domestic and imported value added per unit of employment into a labour cost and functional income distribution component. We argue that the standard interpretation of the German success, based on the compression of labour costs, does not provide a satisfactory account of the different performances recorded among the four countries analysed. Second, we study the evolution of the occupational structure of the labour force involved in the supply chain building an indicator of occupational revealed comparative advantage. Our evidence suggest that the domestic segments of the supply chains are relatively specialised in providing employment at the top of the occupational distribution, while imported employment is relatively more specialised in manual occupations. Moreover, the imported component shows a process of relative upgrading and “middling” of the occupational structure.