IDEAS home Printed from https://ideas.repec.org/a/sae/amsocr/v90y2025i2p195-225.html

Global Value Chains and Union Decline in Rich Democracies

Author

Listed:
  • Matthew C. Mahutga
  • Manjing Gao
  • Roshan K. Pandian

Abstract

This article reassesses the classic thesis linking the globalization of production to union decline. Our argument is three-fold. First, prior literature does not appreciate how the exchange conditions characterizing global value chain (GVC) relations between leading firms in rich democracies and supplier firms in less developed countries (LDCs) can undermine unionization through trade. Second, the worldwide entrenchment of GVCs as an organizational form over time, and cross-national variation in the strength and scope of two key labor market institutions (wage-coordination and Ghent systems), should moderate the effect of LDC trade on unionization. Third, trade with LDCs is endogenous in models of union decline, because high unionization often leads to offshoring. Empirically, we use an instrumental variable (IV) design and a panel dataset covering the longest historical period studied to date. IV estimates suggest that trade with LDCs reduces unionization in rich democracies; these estimates are nearly three times as large as results obtained by OLS, and they increase in size as GVCs entrench worldwide. Estimates also weaken in countries with highly coordinated wage-setting institutions and Ghent systems. Nevertheless, conditional effects and counterfactual histories suggest that GVCs cause union decline even in countries with the most union-friendly institutions, and were more important for union decline overall than either wage-coordination or Ghent systems.

Suggested Citation

  • Matthew C. Mahutga & Manjing Gao & Roshan K. Pandian, 2025. "Global Value Chains and Union Decline in Rich Democracies," American Sociological Review, , vol. 90(2), pages 195-225, April.
    • Handle: RePEc:sae:amsocr:v:90:y:2025:i:2:p:195-225
    DOI: 10.1177/00031224251315496
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/00031224251315496
    Download Restriction: no
    File URL: https://libkey.io/10.1177/00031224251315496?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Farber, Henry S, 1990. "The Decline of Unionization in the United States: What Can Be Learned from Recent Experience," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 75-105, January.
    2. Kleibergen, Frank & Paap, Richard, 2006. "Generalized reduced rank tests using the singular value decomposition," Journal of Econometrics, Elsevier, vol. 133(1), pages 97-126, July.
    3. Kerwin Kofi Charles & Matthew S. Johnson & Nagisa Tadjfar, 2021. "Trade Competition and the Decline in Union Organizing: Evidence from Certification Elections," NBER Working Papers 29464, National Bureau of Economic Research, Inc.
    4. Mark Anner, 2020. "Squeezing workers’ rights in global supply chains: purchasing practices in the Bangladesh garment export sector in comparative perspective," Review of International Political Economy, Taylor & Francis Journals, vol. 27(2), pages 320-347, March.
    5. James Heintz, 2006. "Low-wage manufacturing and global commodity chains: a model in the unequal exchange tradition," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 30(4), pages 507-520, July.
    6. Coe, Neil M. & Yeung, Henry Wai-chung, 2015. "Global Production Networks: Theorizing Economic Development in an Interconnected World," OUP Catalogue, Oxford University Press, number 9780198703914.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Giovanni Dosi, 2025. "The coupling between the dissolution of the old social pact and the emergence of new technologies in the (resistible) path toward the abyss," LEM Papers Series 2025/15, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jennifer Bair & Mathew Mahutga & Marion Werner & Liam Campling, 2021. "Capitalist crisis in the “age of global value chainsâ€," Environment and Planning A, , vol. 53(6), pages 1253-1272, September.
    2. Oya, Carlos & Schaefer, Florian, 2021. "The politics of labour relations in global production networks: Collective action, industrial parks, and local conflict in the Ethiopian apparel sector," World Development, Elsevier, vol. 146(C).
    3. Leanora Alecia Brown & Jorge Martinez-Vazquez, 2015. "International Debt Forgiveness: Who Gets Picked and Its Effect On The Tax Effort Of Developing Countries," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1504, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    4. Arturas Juodis, 2013. "Cointegration Testing in Panel VAR Models Under Partial Identification and Spatial Dependence," UvA-Econometrics Working Papers 13-08, Universiteit van Amsterdam, Dept. of Econometrics.
    5. Fernando Broner & Daragh Clancy & Aitor Erce & Alberto Martin, 2022. "Fiscal Multipliers and Foreign Holdings of Public Debt," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(3), pages 1155-1204.
    6. William Arbour, 2021. "Can Recidivism be Prevented from Behind Bars? Evidence from a Behavioral Program," Working Papers tecipa-683, University of Toronto, Department of Economics.
    7. Akresh, Richard & Lucchetti, Leonardo & Thirumurthy, Harsha, 2012. "Wars and child health: Evidence from the Eritrean–Ethiopian conflict," Journal of Development Economics, Elsevier, vol. 99(2), pages 330-340.
    8. Ahn T. Le, 2003. "Female Labour Market Participation: Differences Between Primary and Tied Movers," Economics Discussion / Working Papers 03-17, The University of Western Australia, Department of Economics.
    9. Peppel-Srebrny, Jemima, 2021. "Not all government budget deficits are created equal: Evidence from advanced economies' sovereign bond markets," Journal of International Money and Finance, Elsevier, vol. 118(C).
    10. Ouedraogo, Benoît & Ouedraogo, Idrissa & Sawadogo, Hamidou, 2025. "Effects of trade openness on income inequality in sub-Saharan Africa: direct effects and transmission channels," International Economics, Elsevier, vol. 184(C).
    11. Lee, Boram & Rosenthal, Leonard & Veld, Chris & Veld-Merkoulova, Yulia, 2015. "Stock market expectations and risk aversion of individual investors," International Review of Financial Analysis, Elsevier, vol. 40(C), pages 122-131.
    12. MacDonald, Peter, 2013. "Labour substitution and the scope for military outsourcing," MPRA Paper 46688, University Library of Munich, Germany.
    13. Shuai Shi & Kathy Pain, 2020. "Investigating China’s Mid-Yangtze River economic growth region using a spatial network growth model," Urban Studies, Urban Studies Journal Limited, vol. 57(14), pages 2973-2993, November.
    14. Jin, Hyun Joung & Kim, Jang-Chul & Su, Qing, 2025. "Economic freedom and market resilience: Safeguarding liquidity in times of crisis," Journal of Multinational Financial Management, Elsevier, vol. 79(C).
    15. Arne Henningsen & Guy Low & David Wuepper & Tobias Dalhaus & Hugo Storm & Dagim Belay & Stefan Hirsch, 2026. "Estimating Causal Effects With Observational Data: Guidelines for Agricultural and Applied Economists," Journal of Agricultural Economics, Wiley Blackwell, vol. 77(2), pages 356-382, June.
    16. Benjamin Born & Francesco D’Ascanio & Gernot J. Müller & Johannes Pfeifer, 2024. "Mr. Keynes Meets the Classics: Government Spending and the Real Exchange Rate," Journal of Political Economy, University of Chicago Press, vol. 132(5), pages 1642-1683.
    17. Garcia-Fuentes, Pablo A. & Kennedy, P. Lynn & Ferreira, Gustavo F.C., 2025. "Growth effects of remittances in developing countries: A growth accounting approach," Emerging Markets Review, Elsevier, vol. 67(C).
    18. Miguel Atienza & Guillermo Armando Ronda-Pupo & Nicholas Phelps, 2019. "Bridges over troubled water? Journals, geographers and economists in the field of economy and space 1980–2017," Environment and Planning A, , vol. 51(8), pages 1800-1823, November.
    19. Jin, Laiqun & Dai, Jiaying & Jiang, Weijie & Cao, Kairui, 2023. "Digital finance and misallocation of resources among firms: Evidence from China," The North American Journal of Economics and Finance, Elsevier, vol. 66(C).
    20. Dramane Coulibaly & Blaise Gnimassoun & Valérie Mignon, 2018. "Growth-enhancing Effect of Openness to Trade and Migrations: What is the Effective Transmission Channel for Africa?," Journal of African Economies, Centre for the Study of African Economies, vol. 27(4), pages 369-404.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:amsocr:v:90:y:2025:i:2:p:195-225. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.