Abstract
This paper uses a multi-country microeconomic setting to contribute to the literature on the nexus between production fragmentation and wages. Exploiting a rich dataset on over 110,000 workers from nine Eastern and Western European countries and the United States, we study the relationship between individual workers’ wages and industry ties into global value chains (GVCs). We find an inverse (but weak) relationship between the degree of industries’ involvement in GVCs and wages. Workers employed in routine occupations clearly earn less, but it is difficult to attribute it to the role played by the involvement of their countries and industries in global value chains.
Highlights
This paper analyses the relationship between the wages of individual workers and their industries’ ties into global value chains in a broad international microeconomicElectronic supplementary material The online version of this article contains supplementary material, which is available to authorized users.Parteka A., Wolszczak-Derlacz J.framework with data on more than 110,000 workers in 34 manufacturing and service industries in nine European Union (EU) countries and the United States.1 To the best of our knowledge, this is the first attempt to address this issue in a multi-country framework and a microeconomic setting.We contribute to the literature that analyses the labour market response to global production sharing2 which has recently become one of the main research themes in labour economics and international economics
Los et al (2015b) document that the share of value added outside the country of completion has increased in almost all product chains since 1995.5 despite the abundant recent literature on global value chains (GVCs), as far as we know there have been no explicit assessments of the foreign value added (FVA)-wage nexus, especially in a micro-level setting allowing for a broader crosscountry and cross-industry comparative perspective
The paper contributes to the empirical literature on the effects that cross-border production sharing – global value chains – and the resulting production links have on national labour markets
Summary
This paper analyses the relationship between the wages of individual workers and their industries’ ties into global value chains in a broad international microeconomic. Los et al (2015b) document that the share of value added outside the country of completion has increased in almost all product chains since 1995.5 despite the abundant recent literature on GVCs (see, among many, Amador and Cabral 2016; Amador and di Mauro 2015; Baldwin et al 2012; Johnson 2014; Johnson and Noguera 2012; Los et al 2015a; Mattoo et al 2013), as far as we know there have been no explicit assessments of the FVA-wage nexus, especially in a micro-level setting allowing for a broader crosscountry and cross-industry comparative perspective.
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