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Global Supply Chains and Wage Inequality

Author

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  • Arnaud Costinot
  • Jonathan Vogel
  • Su Wang

Abstract

A salient feature of globalization in recent decades is the emergence of "global supply chains" in which different countries specialize in different stages of a sequential production process. In Arnaud Costinot, Jonathan Vogel and Su Wang (2011), CVW hereafter, we have developed a simple theory of trade with sequential production to shed light on how global supply chains affect the interdependence of nations. In this paper we develop a multi-factor extension of CVW to explore how the emergence of global supply chains may affect wage inequality within countries. Our main theoretical prediction is that the emergence of global supply chains has opposite effects on wage inequality among workers employed at the bottom and the top of these chains. This suggests that the consequences of globalization on wage inequality may be very different in primary sectors like agriculture or mining than in manufacturing sectors.

Suggested Citation

  • Arnaud Costinot & Jonathan Vogel & Su Wang, 2012. "Global Supply Chains and Wage Inequality," NBER Working Papers 17976, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:17976
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    1. Arnaud Costinot & Jonathan Vogel & Su Wang, 2013. "An Elementary Theory of Global Supply Chains," Review of Economic Studies, Oxford University Press, vol. 80(1), pages 109-144.
    2. Arnaud Costinot & Jonathan Vogel, 2010. "Matching and Inequality in the World Economy," Journal of Political Economy, University of Chicago Press, vol. 118(4), pages 747-786, August.
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    Cited by:

    1. Tang, Heiwai & Wang, Fei & Wang, Zhi, 2014. "The domestic segment of global supply chains in China under state capitalism," Policy Research Working Paper Series 6960, The World Bank.
    2. Philipp Harms & Jaewon Jung & Oliver Lorz, 2014. "Offshoring and Sequential Production Chains: A General-Equilibrium Analysis," Working Papers 14.01, Swiss National Bank, Study Center Gerzensee.
    3. Danzer, Alexander M. & Grundke, Robert, 2016. "Coerced Labor in the Cotton Sector: How Global Commodity Prices (Don't) Transmit to the Poor," IZA Discussion Papers 9971, Institute for the Study of Labor (IZA).
    4. repec:dgr:rugggd:gd-135 is not listed on IDEAS
    5. Philipp Harms & Jaewon Jung & Oliver Lorz, 2017. "Offshoring and Sequential Production Chains: A General Equilibrium Analysis," THEMA Working Papers 2017-25, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    6. Marcel P. Timmer & Abdul Azeez Erumban & Bart Los & Robert Stehrer & Gaaitzen J. de Vries, 2014. "Slicing Up Global Value Chains," Journal of Economic Perspectives, American Economic Association, vol. 28(2), pages 99-118, Spring.

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    JEL classification:

    • F1 - International Economics - - Trade

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