Abstract
Global value chains (GVCs) have been a vehicle for job creation in developing Asia, but there is mounting concern that more sophisticated and cost-effective technology could displace workers through automation or reshoring of production. We use the demand-based input–output approach in Reijnders and de Vries (2018) to examine how employment responded to consumption, trade, and technological advances in 12 economies that accounted for 90% of employment in developing Asia during the period 2005–2015. Structural decomposition analysis based on the Asian Development Bank Multiregional Input–Output Tables combined with harmonized cross-country occupation data indicates that, other things being equal, technological change within GVCs was associated with a decrease in labor demand across all sectors, and an increase in the share of nonroutine cognitive occupations. We also find that increased domestic consumption expenditures of goods and services generated an increase in labor demand large enough to offset the negative employment impact of technological change. Finally, we do not find evidence of major shifts in occupational labor demand due to reshoring.
Highlights
Between 2005 and 2015, Asia lifted 611 million people out of poverty, bringing down the headcount ratio from 25.6% to 7% (ADB 2017)
The second outlier is Sri Lanka, where a 30-year civil war ended in 2009, followed by a period of record-breaking economic growth. This had a major effect on manufacturing employment and our results are less precise for these countries
In this paper we have expanded coverage to developing countries by studying changes in the job structure in developing Asian countries. We have examined these job structure changes through the lens of a global value chains (GVCs) framework
Summary
Between 2005 and 2015, Asia lifted 611 million people out of poverty, bringing down the headcount ratio from 25.6% to 7% (ADB 2017). Participation in global value chains (GVCs) has been an important part of this success story. In 2016, Asia’s GVC participation, approximated by the share of value added to gross exports that is used for further processing in cross-border production networks, was 61.1% (ADB 2017). This was second only to the European Union. On one end of the spectrum are the high-income economies that tend to specialize in the knowledge-intensive tasks on the value chain. On the other end of the spectrum are the low-income economies whose firms specialize in tasks that rely on low-skilled labor, resulting in limited opportunities to benefit from technology diffusion and skills upgrading
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