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Patterns of international fragmentation of production and the relative demand for labor

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, looking at how it affects relative labor demand. Models of trade due to fragmentation of production suggest that when international fragmentation takes place we might observe a change in the factor proportion in the affected industries. We use outward-processing-trade data - specifically related to international fragmentation of production - to test if the shift in the ratio of skilled and unskilled labor employed in Italy and Germany during the 1990s is related to fragmentation.

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Paper provided by Cattaneo University (LIUC) in its series LIUC Papers in Economics with number 167.

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Length: 25 pages
Date of creation: Apr 2005
Handle: RePEc:liu:liucec:167
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  14. Egger, Hartmut & Egger, Peter, 2001. "Cross-border sourcing and outward processing in EU manufacturing," The North American Journal of Economics and Finance, Elsevier, vol. 12(3), pages 243-256, November.
  15. 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;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(4), pages 629-651, December.
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  18. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 367-397.
  19. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
  20. 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;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 137(1), pages 80-104, March.
  21. Helg, Rodolfo & Tajoli, Lucia, 2005. "Patterns of international fragmentation of production and the relative demand for labor," The North American Journal of Economics and Finance, Elsevier, vol. 16(2), pages 233-254, August.
  22. 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.
  23. 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.
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  25. Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
  26. Vanessa Strauss-Kahn, 2004. "The Role of Globalization in the Within-Industry Shift Away from Unskilled Workers in France," NBER Chapters,in: Challenges to Globalization: Analyzing the Economics, pages 209-234 National Bureau of Economic Research, Inc.
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