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Patterns of International Fragmentation of Production and Implications for the Labor Markets

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Author Info

  • Rodolfo Helg

    (Cattaneo University, LIUC and CESPRI, Bocconi University)

  • Lucia Tajoli

    (Politecnico di Milano and CESPRI, Bocconi University)

Abstract

Growing shares of international trade flows consist of intermediate and unfinished goods shipped from one country to another to combine manufacturing or services activities at home with those performed abroad. This configuration of the productive structure has been named “internationally fragmented”. The purpose of our work is to analyze the labor market effects of international fragmentation of production in Europe, looking at how it affects relative labor demand. Models of trade due to fragmentation of production suggest that when international fragmentation takes place we can expect to observe a change in the relative factor intensities of the affected industries. We use international trade data specifically related to international fragmentation of production to test if the shift in intensity of skilled and unskilled labor employed in Italy and Germany during the 1990s it related to the fragmentation activity.

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File URL: http://fordschool.umich.edu/rsie/workingpapers/Papers501-525/r503.pdf
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Bibliographic Info

Paper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number 503.

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Length: 33 pages
Date of creation: 2002
Date of revision:
Handle: RePEc:mie:wpaper:503

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Postal: ANN ARBOR MICHIGAN 48109
Web page: http://www.fordschool.umich.edu/rsie/
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Related research

Keywords: international fragmentation of production; trade; labor demand;

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References

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  1. Helpman, Elhanan & Antras, Pol, 2004. "Global Sourcing," Scholarly Articles 4784029, Harvard University Department of Economics.
  2. Hijzen, Alexander & Görg, Holger & Hine, Robert C., 2003. "International Fragmentation and Relative Wages in the UK," IZA Discussion Papers 717, Institute for the Study of Labor (IZA).
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  6. Deardorff, A.V., 1998. "Fragmentation in Simple Trade Models," Working Papers 422, Research Seminar in International Economics, University of Michigan.
  7. Alan V Deardorff, 2004. "Ricardian Comparative Advantage with Intermediate Inputs," Working Papers 501, Research Seminar in International Economics, University of Michigan.
  8. Deardorff, A.V., 1998. "Fragmentation Across Cones," Papers 98-14, Michigan - Center for Research on Economic & Social Theory.
  9. Hanson, Gordon H, 1996. "Localization Economies, Vertical Organization, and Trade," American Economic Review, American Economic Association, vol. 86(5), pages 1266-78, December.
  10. Anderton, Bob & Brenton, Paul, 1999. "Outsourcing and Low-Skilled Workers in the UK," Bulletin of Economic Research, Wiley Blackwell, vol. 51(4), pages 267-85, October.
  11. Salvatore Baldone & Fabio Sdogati & Lucia Tajoli, 2002. "Moving to Central-Eastern Europe: Fragmentation of Production and Competitiveness of the European Textile and Apparel Industry," Rivista di Politica Economica, SIPI Spa, vol. 92(1), pages 209-282, January-F.
  12. Haskel, Jonathan E. & Slaughter, Matthew J., 2002. "Does the sector bias of skill-biased technical change explain changing skill premia?," European Economic Review, Elsevier, vol. 46(10), pages 1757-1783, December.
  13. Robert Anderton & Paul Brenton & Eva Oscarsson, 2002. "What’s trade got to do with it? Relative demand for skills within Swedish manufacturing," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(4), pages 629-651, December.
  14. Robert Feenstra & Gordon Hanson, 2001. "Global Production Sharing and Rising Inequality: A Survey of Trade and Wages," NBER Working Papers 8372, National Bureau of Economic Research, Inc.
  15. Robert C. Feenstra & Gordon H. Hanson, 1996. "Globalization, Outsourcing, and Wage Inequality," NBER Working Papers 5424, National Bureau of Economic Research, Inc.
  16. Berman, Eli & Bound, John & Griliches, Zvi, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 367-97, May.
  17. Salvatore Baldone & Fabio Sdogati & Lucia Tajoli, 2001. "Patterns and determinants of international fragmentation of production: Evidence from outward processing trade between the EU and Central Eastern European countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 137(1), pages 80-104, March.
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Citations

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Cited by:
  1. Ariel Burstein & Christopher Kurz & Linda Tesar, 2008. "Trade, Production Sharing, and the International Transmission of Business Cycles," NBER Working Papers 13731, National Bureau of Economic Research, Inc.
  2. Anna M. Falzoni & Alessandra Venturini & Claudia Villosio, 2004. "Wage Differentials and International Trade in Italy Using Individual Micro Data 1991-1996," Development Working Papers 190, Centro Studi Luca d\'Agliano, University of Milano.
  3. Swenson, Deborah L., 2004. "Entry costs and outsourcing decisions: evidence from the U.S. overseas assembly provision," The North American Journal of Economics and Finance, Elsevier, vol. 15(3), pages 267-286, December.
  4. Carmen Díaz Mora & Rosario Gandoy Juste, . "Estrategias de fragmentación de la producción: Una realidad en la industria española?," Studies on the Spanish Economy 180, FEDEA.
  5. ITO Banri & WAKASUGI Ryuhei & TOMIURA Eiichi, 2008. "Offshoring and Productivity: Evidence from Japanese Firm-level Data," Discussion papers 08028, Research Institute of Economy, Trade and Industry (RIETI).

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