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

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  • Nobuaki Yamashita

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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 a newly constructed index using trade data on parts and components to measure intraindustry 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, it is found that the expansion of fragmentation trade with developing East Asian countries has had a significant impact on the skills composition of Japanese manufacturing employment. At the same time, fragmentation trade with high income countries has had a skill downgrading effect.

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File URL: https://crawford.anu.edu.au/acde/publications/publish/papers/wp2008/wp_econ_2008_06.pdf
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Bibliographic Info

Paper provided by The Australian National University, Arndt-Corden Department of Economics in its series Departmental Working Papers with number 2008-06.

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Length: 52 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:pas:papers:2008-06

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Keywords: Production Fragmentation; Skill Upgrading; Japanese Manufacturing;

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Cited by:
  1. KWON Hyeog Ug, 2012. "Offshoring of Japanese Small and Medium Enterprises (Japanese)," Discussion Papers (Japanese) 12004, Research Institute of Economy, Trade and Industry (RIETI).
  2. Athukorala, Prema-chandra & Yamashita, Nobuaki, 2006. "Production fragmentation and trade integration: East Asia in a global context," The North American Journal of Economics and Finance, Elsevier, vol. 17(3), pages 233-256, December.

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