Upstreamness of Employment and Global Financial Crisis in Poland: The Role of Position in Global Value Chains

Abstract

Intensifying fragmentation of production implies that the distance to the final consumer gradually increases on average. In periods of economic crises, typically associated with structural reallocation, impulses from global trading patterns combined with local adverse shocks to productivity and demand may asymmetrically affect the industries, depending on their position in the global value chains. In a similar spirit, the subsequent adjustment to shocks at firm level may in time change the relative position of a given supplier in the global value chain, which is likely to drive the upstreamness of an industry in a given country. The analysis of the two processes can help us understand the micro-level adjustment during the course of the recent financial crisis. Moreover, the standard measures of upstreamness give predominant weight to the value added. While this indicator may be relevant in many contexts, from the perspective of the social costs of global financial crises, this chapter will focus on employment and its upstreamness. The measures of employment upstreamness will be related to labour demand and the depth of the labour market reaction, with special emphasis on their possibly diversified position in the global value chains.