Job Transfers along Global Value Chains and Their Determinants

This study first uses a world input-output model to trace job creation, absorption, and transfer along global value chains (GVCs) via three channels including the traditional trade, simple and complex GVCs trade according to whether and how cross-border production sharing happens. We find that jobs created via simple and complex GVCs have rapidly expanded, especially for the service sectors; more and more countries’ jobs generated via GVCs have tended to be highly dependent on China’s final demand. Further using a gravity model for 1995-2018 based on the OECD data, we show that the determinants of bilateral job transfers in the gravity model perform very differently via different channels of GVCs; the existence of complex GVCs provides opportunities for geographically distant countries with different languages and legal systems to create mutual jobs by their engagement in GVCs. These findings could help policymakers’ better understanding of the complex interdependency of the trade-related job creation among countries and potentially help better monitor and improve their GVC governance in more flexible and diversified ways.