Patterns of integration in global value chains and the changing structure of employment in Europe

Abstract

Abstract This paper aims at revisiting the empirical evidence on the recent trends of countries’ integration in global value chains (GVCs) in Europe. It investigates two potential sources of unbalances that these processes might relate to (i) the sectoral specialization of the patterns of international fragmentation, whether high-technology manufacturing or knowledge-intensive business services (KIBS), and (ii) the occupational categories that have benefited or been penalized by these trends. A rich empirical mapping of these trends in the European countries is provided, based on World Input–Output Database and European Union Labour Force Survey (EU LFS) data. The results on the overall and sectoral-specific trends of integration in GVCs and the associated changes in the shares of managers and manual workers show dual-speed and qualitatively different integration patterns in Europe, with Eastern European (EE) countries rapidly integrating in high-tech manufacturing and the core of Western countries strengthening their mutual integration in the KIBS area. Despite the relatively “good quality” integration of EE countries, the evidence does not seem to reveal a mirroring upgrading of employment structures. While this empirical contribution does not attempt to identify causal relationships, the picture provided in the paper shows that, overall, integration in GVCs seems to reproduce and perhaps exacerbate the initial asymmetries in the sectoral and employment structure, with employment shares of manual workers reducing on the whole and knowledge-intensive occupations concentrating in Western Europe.