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Patterns of International Fragmentation of Production and Implications for the Labor Markets


  • Rodolfo Helg

    (Cattaneo University, LIUC and CESPRI, Bocconi University)

  • Lucia Tajoli

    (Politecnico di Milano and CESPRI, Bocconi University)


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 in Europe, looking at how it affects relative labor demand. Models of trade due to fragmentation of production suggest that when international fragmentation takes place we can expect to observe a change in the relative factor intensities of the affected industries. We use international trade data specifically related to international fragmentation of production to test if the shift in intensity of skilled and unskilled labor employed in Italy and Germany during the 1990s it related to the fragmentation activity.

Suggested Citation

  • Rodolfo Helg & Lucia Tajoli, 2002. "Patterns of International Fragmentation of Production and Implications for the Labor Markets," Working Papers 503, Research Seminar in International Economics, University of Michigan.
  • Handle: RePEc:mie:wpaper:503

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    References listed on IDEAS

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    Cited by:

    1. Anna M. Falzoni & Alessandra Venturini & Claudia Villosio, 2004. "Wage Differentials and International Trade in Italy Using Individual Micro Data 1991-1996," Development Working Papers 190, Centro Studi Luca d'Agliano, University of Milano.
    2. Burstein, Ariel & Kurz, Christopher & Tesar, Linda, 2008. "Trade, production sharing, and the international transmission of business cycles," Journal of Monetary Economics, Elsevier, vol. 55(4), pages 775-795, May.
    3. Li Tang & Michael Murphree & Dan Breznitz, 2016. "Structured uncertainty: a pilot study on innovation in China’s mobile phone handset industry," The Journal of Technology Transfer, Springer, vol. 41(5), pages 1168-1194, October.
    4. Elia, Stefano & Mariotti, Ilaria & Piscitello, Lucia, 2009. "The impact of outward FDI on the home country's labour demand and skill composition," International Business Review, Elsevier, vol. 18(4), pages 357-372, August.
    5. Swenson, Deborah L., 2004. "Entry costs and outsourcing decisions: evidence from the U.S. overseas assembly provision," The North American Journal of Economics and Finance, Elsevier, vol. 15(3), pages 267-286, December.
    6. Carmen DÌaz Mora & Rosario Gandoy Juste, "undated". "Estrategias de fragmentaciÛn de la producciÛn: Una realidad en la industria espanola?," Studies on the Spanish Economy 180, FEDEA.
    7. ITO Banri & WAKASUGI Ryuhei & TOMIURA Eiichi, 2008. "Offshoring and Productivity: Evidence from Japanese Firm-level Data," Discussion papers 08028, Research Institute of Economy, Trade and Industry (RIETI).
    8. Nobuaki Yamashita, 2010. "International Fragmentation of Production," Books, Edward Elgar Publishing, number 13615.

    More about this item


    international fragmentation of production; trade; labor demand;

    JEL classification:

    • F1 - International Economics - - Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions


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