Wage response to global production links: evidence for workers from 28 European countries (2005–2014)

Abstract

Using rich individual level data on workers from 28 European countries, this study provides the first so extensive cross-country assessment of wage response to global production links within GVC in the period 2005–2014. Unlike the other studies, the authors (i) address the importance of backward linkages in globally integrated production structures (capturing imports of goods and services needed in any stage of the production of the final product); (ii) measure occupational task profile of workers with country-specific indices of routinisation; (iii) compare the impact of global production links on wages between workers from Western, Central-Eastern and Southern Europe; employed in manufacturing and non-manufacturing sectors; (iv) account for direct and indirect dependence on GVC imports from developing and high income countries. The study takes into account the potential endogeneity issues. The results suggest that global import intensity of production exhibits negative pressure on wages in Europe. This effect concerns mainly workers from Western Europe employed in manufacturing and is driven by production links with non-high income countries but our counterfactual estimates suggest that the effect is economically small.

Wage effects of global value chains participation and position: An industry-level analysis1

“…Akin to this, the position along GVC also determines the amount of value capture actors involved in a value chain get. Hence, our study deviates from Lopez Gonzalez, Kowalski, and Achard (2015), Parteka and Wolszczak-Derlacz (2020), Lu et al (2019), in that we consider the wage effects of both types of GVC integration as well as the GVC position. Along this line, our study comes closest to Szymczak and Wolszczak-Derlacz (2021), but differs in so many ways.…”

“…Our study contributes to the nascent literature on the wage effects of GVC. To our knowledge, four papers including Lopez Gonzalez, Kowalski, and Achard (2015), Parteka and Wolszczak-Derlacz (2020), Lu et al (2019), and Szymczak and Wolszczak-Derlacz (2021) have empirically analyzed the relationship. Lopez Gonzalez, Kowalski, and Achard (2015) examined the effect of GVC participation on aggregate wage inequality.…”

“…Our study differs from Lopez Gonzalez, Kowalski, and Achard (2015) in that we are interested in labor compensation and not income inequality. Countries -or more specifically firms, participate in GVCs through backward participation and/or forward participation, suggesting that the focus on only backward integration adopted by Lopez Gonzalez, Kowalski, and Achard (2015), Parteka andWolszczak-Derlacz (2020), andLu et al (2019) give an incomplete picture of a country's overall GVC participation and its potential effect on wages. Akin to this, the position along GVC also determines the amount of value capture actors involved in a value chain get.…”

Oligopoly-driven development: The World Bank’s Trading for Development in the Age of Global Value Chains in perspective

“…Considerable evidence shows that the share of income in developed countries has shifted significantly from labour to capital since the early 1980s (Elsby et al., 2013). Studies have attributed the trend both to the rise of ‘superstar’ firms (Autor et al., 2017), rising TNC profits (Barkai, 2016; Kohler and Cripps, 2018) and GVC participation (Dao et al., 2017; Parteka and Wolszczak‐Derlacz, 2018). Contrary to the predictions of Heckscher–Ohlin model of comparative advantage trade theory (see Table 2) this has occurred in both developed and developing countries (Karabarbounis and Neiman, 2014).…”

Does global value chain engagement improve firms' wages: Evidence from China

“…Dao, Das, Koczan, and Lian () argue that the expansion of GVCs has increased the capital intensity of production and thus reduced wage share. Parteka and Wolszczak‐Derlacz () use employee data from 28 European countries from 2005 to 2014 to study the impact of GVC participation on wages. The results show that GVC participation would reduce wage levels in Western European countries, especially developing countries.…”