Are Your Labor Shares Set in Beijing? The View through the Lens of Global Value Chains

Wed, 09/22/2021 - 12:00 / 13:00

405, Viale Romania

Speaker: Ariell Reshef , Paris School of Economics

Co-author: Gianluca Santoni (CEPII)


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) integration, after which there is no trend for both. We develop a gravity-based instrument and find that the acceleration in the decline in labor shares is caused by increased intensity of intermediate input exporting. The integration of China into GVCs has a disproportionally large effect. Declines in labor shares are shouldered mostly by less skilled workers in fabrication functions. Relatively capital abundant countries integrate more into forward GVCs linkages, which is associated with greater upstreamness within GVCs and increases in capital intensity. Forward GVC integration is associated with international vertical integration of both upstream input production and of downstream assembly.

Further info regarding the paper at the following link:…