Are your labor shares set in Beijing? The view through the lens of global value chains

Ariell Reshef () and Gianluca Santoni
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Ariell Reshef: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

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Abstract: We study the evolution of labor shares in 1995-2014, while taking into account international trade based on value added concepts. Declines in labor shares accelerate in 2001-2007, concurrently with global value chain (GVC) participation, after which there is no trend for both. We develop a gravity-based instrument for GVC participation and find that the acceleration in the decline in labor shares is caused by increased intensity of forward GVC participation. The insertion of China into GVCs has a disproportionally large effect through this mechanism. Declines in labor shares are shouldered mostly by less skilled workers in fabrication functions. Relatively capital abundant countries participate more in forward GVCs linkages, which is associated with greater upstreamness within GVCs and increases in capital intensity. Forward GVC participation is associated with international vertical integration of both upstream intermediate input production and of offshoring of downstream assembly.

Keywords: labor share; global value chains; upstreamness (search for similar items in EconPapers)
Date: 2023
Note: View the original document on HAL open archive server: https://hal.science/hal-04378808v1
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Published in European Economic Review, 2023, 155, ⟨10.1016/j.euroecorev.2023.104459⟩

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Related works:
Journal Article: Are your labor shares set in Beijing? The view through the lens of global value chains (2023)
Working Paper: Are your labor shares set in Beijing? The view through the lens of global value chains (2023)
Working Paper: Are your labor shares set in Beijing? The view through the lens of global value chains (2023)
Working Paper: Are Your Labor Shares Set in Beijing? The View through the Lens of Global Value Chains (2022)
Working Paper: Are Your Labor Shares Set in Beijing ? The View through the Lens of Global Value Chains (2022)
Working Paper: Are Your Labor Shares Set in Beijing ? The View through the Lens of Global Value Chains (2022)
Working Paper: Are Your Labor Shares Set in Beijing? The View through the Lens of Global Value Chains (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04378808

DOI: 10.1016/j.euroecorev.2023.104459

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