This study examines the overall effect of global value chains (GVCs) on wages and labour demand. It exploits the World Input-Output Database to measure GVC involvement via recently developed participation indices (using both backward and forward linkages) and the relative GVC position using three-stage least squares regression. We find that the relative GVC position is negatively correlated with wages and employment and that the GVC participation effect depends on whether backward or forward linkages are considered. Moreover, we find heterogeneity across both countries (middle-vs high-income) and sectors (manufacturing versus services). Notably, the effect of GVC involvement on the labour market differs from that produced by traditional domestic trade.

This paper examines the relationship between the relative position of industries in Global Value Chains (GVC) and wages in 10 Central and Eastern European countries. We combine GVC measures of global import intensity of production, upstreamness and the length of the value chain with micro-data on workers. We find that the wages of Central and Eastern European countries workers are higher when their industry is at the beginning of the chain or at the end than in the middle. Secondly, wage changes depend on the interplay between upstreamness and GVC intensity. In sectors close to final demand, greater production fragmentation is associated with lower wages.

Research background: In the era of globalization, there is a need to address decent work deficits in Global Value Chains (GVCs). The forms of working conditions reveal a broad dispersion of contents. The literature review exposes hardly any Europe-focused research assessing the socio-economic impact of global production links and going beyond their pure economic effects assessed in terms of employment, productivity or wages. Purpose of the article: This paper investigates how involvement in GVCs affects labor standards. In particular, we assess how the integration into GVCs impacts the probability of having indefinite type of employment contract, which stands for one of the decent work indicator. Moreover, we draw individual and firm-level characteristics determining the type of employment contract. Methods: We use linked employer-employee data from the Structure of Earnings Survey merged with industry-level statistics on GVCs based on World Input-Output Database — the sample is composed of over 5 million workers from 10 Central and Eastern European countries (CEEC) observed in 2014. The involvement into GVCs is measured using a novel approach based on the concepts of global import intensity (GII). We employ logistic regression with robust standard errors. Findings & Value added: Controlling for individual and firm-level characteristics (sex, age, education level, length of service in enterprise, size of the enterprise) we find that greater integration into GVCs increases the probability of having temporary type of employment contact, mainly in tradable sectors. However, across CEE countries the relation between GVC and employment type is mixed. In this way we expand the existing literature by reporting the effects of GVCs on labor standards in CEEC.

PurposeThe study aims to examine the joint effects of foreign ownership (FO) and involvement in global value chains (GVCs) on the productivity performance of firms from a catching-up country (Poland) and a leader economy (Germany).Design/methodology/approachThe authors use micro-level data on firms combined with several sector-level GVC participation measures. The authors investigate whether the link between productivity and the overall sectoral degree of involvement in global production structures depends on a firm's ownership. The authors verify the robustness of the obtained results by using an instrumental variables approach and weighted regression.FindingsThe results show that domestically owned firms are less productive than foreign ones, which is particularly true at low GVC participation levels. However, as GVC involvement increases, the FO productivity premium decreases, leading to productivity catching up between foreign and domestically owned firms. This mechanism is similar in Poland and Germany. However, in the leader country (Germany), the productivity performance of domestically owned firms is more stable along the distribution of GVC involvement.Originality/valueThis study contributes to the foreign direct investment (FDI)–productivity literature by comparing the catching-up and developed countries' perspectives and incorporating the productivity–GVC relationship into the FDI analysis. The authors show that the FO premium is not confined to the developing context but is also present in a leader country. Moreover, the link between productivity and the overall sectoral degree of involvement in global production structures depends on a firm's ownership.

This study examines whether, and how, differences in wage bargaining schemes shape the relationship between global value chains (GVCs) and the wages of workers while considering both GVC participation and position in GVC. Our dataset is derived from the European Structure of Earnings Survey (SES), containing employee–employer data from 18 European countries, merged with sectoral data from the World Input-Output Database (WIOD). The results of an augmented Mincer-type regression show that under national and industry wage bargaining schemes, greater participation in GVCs is associated with lower wages, whereas no adverse impact from GVCs is observed for workers under enterprise bargaining schemes. Finally, numerous extensions and instrumental variable estimations confirm that the type of collective pay agreement may alter the response of wages to both GVC participation and position.