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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Paper provided by Australian National University, Economics RSPAS in its series Departmental Working Papers with number
2008-06.
Find related papers by JEL classification: F14 - International Economics - - Trade - - - Country and Industry Studies of Trade F16 - International Economics - - Trade - - - Trade and Labor Market Interactions J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
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