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The effect of global value chain participation on the labour share: industry level evidence from emerging economies

The effect of global value chain participation on the labour share: industry level evidence from emerging economies

Guschanski, Alexander ORCID: 0000-0002-7818-8264 and Onaran, Özlem ORCID: 0000-0002-6345-9922 (2022) The effect of global value chain participation on the labour share: industry level evidence from emerging economies. Development and Change. ISSN 0012-155X (In Press)

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Abstract

Participation in global value chains (GVCs) has been proposed as a central means for emerging economies to develop and technologically upgrade. However, the effects of GVCs on income distribution in the global South remain underexplored. We present an econometric analysis of the determinants of the labour share in seven emerging economies for the period 1995–2014. Drawing on industry-level data from global input-output tables, we focus on how GVC participation – in particular offshoring of production from advanced to emerging economies – affects the labour share of different skill groups within manufacturing and service industries. We also estimate the effects of GVCs on productivity, real wages, and the capital-value added ratio to shed further light on the channels through which GVCs affect the labour share. In both industry groups, we find that integration into GVCs with advanced economies has a negative effect on the labour share in emerging economies, particularly for medium-skilled workers. In contrast, higher union density and government consumption spending have positive effects on the labour share. Thus, labour in emerging economies loses out relative to capital as production becomes more integrated across borders.

Item Type: Article
Uncontrolled Keywords: labour share; income distribution; emerging economies; global value chains; union density; technological change
Subjects: H Social Sciences > H Social Sciences (General)
Faculty / School / Research Centre / Research Group: Faculty of Business
Faculty of Business > Institute of Political Economy, Governance, Finance and Accountability (IPEGFA)
Faculty of Business > Institute of Political Economy, Governance, Finance and Accountability (IPEGFA) > Greenwich Political Economy Research Centre (GPERC)
Last Modified: 13 Aug 2022 10:16
URI: http://gala.gre.ac.uk/id/eprint/37151

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