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The Impact of Production Fragmentation on Industry Skill Upgrading: New Evidence from Japanese Manufacturing

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  • Nobuaki Yamashita

Abstract

This paper examines the hypothesis that industries engaged in international fragmentation of production experience greater skill upgrading using a panel dataset of Japanese manufacturing over the period 1980-2000. The novelty of the study comes from the use of an index newly constructed using data on trade in parts and components to measure inter-industry variations in the degree of international vertical specialization (fragmentation intensity of trade). It also employs a methodology designed to embody peculiarities of Japan's fragmentation trade pattern. While the findings of existing studies are inconclusive, we find that the expansion of fragmentation trade with developing East Asian countries has had a significant impact on the skills composition of Japanese manufacturing employment. By contrast, trade with high income countries seems to have had a skill downgrading effect.

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File URL: http://hi-stat.ier.hit-u.ac.jp/research/discussion/2006/pdf/D06-202.pdf
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Bibliographic Info

Paper provided by Institute of Economic Research, Hitotsubashi University in its series Hi-Stat Discussion Paper Series with number d06-202.

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Date of creation: Jan 2007
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Handle: RePEc:hst:hstdps:d06-202

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Keywords: International Fragmentation of Production; Skill Upgrading; Japanese Manufacturing;

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Cited by:
  1. Sanghoon Ahn & Kyoji Fukao & Keiko Ito, 2008. "The Impact of Outsourcing on the Japanese and South Korean Labor Markets: International Outsourcing of Intermediate Inputs and Assembly in East Asia," Global COE Hi-Stat Discussion Paper Series gd08-001, Institute of Economic Research, Hitotsubashi University.
  2. Prema-chandra Athukorala & Nobuaki Yamashita, 2005. "Production Fragmentation and Trade Integration: East Asia in a Global Context," Departmental Working Papers 2005-07, The Australian National University, Arndt-Corden Department of Economics.

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