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Trade, global value chains and wage-income inequality

Author

Listed:
  • Javier Lopez Gonzalez

    (OECD)

  • Przemyslaw Kowalski

    (OECD)

  • Pascal Achard

    (OECD)

Abstract

The rise in global value chain (GVC) participation has coincided with significant changes in the distribution of wage income both within and across countries. This paper sets out to identify the linkages between these phenomena. It shows that GVC participation has a small effect on the distribution of wages and, when it has, it can reduce wage inequality when it concerns participation related to low-skilled segments of the labour force. This suggests that the potential tensions between equity and aggregate economic outcomes of GVC participation hold only in particular cases, namely when participation relates to high-skilled segments of the labour force. For policy-makers seeking to maximise the benefits of GVC participation, questions of a more equitable distribution of returns to workers might focus on skill-upgrading of low-skilled labour by promoting further tertiary education and development of skills.

Suggested Citation

  • Javier Lopez Gonzalez & Przemyslaw Kowalski & Pascal Achard, 2015. "Trade, global value chains and wage-income inequality," OECD Trade Policy Papers 182, OECD Publishing.
  • Handle: RePEc:oec:traaab:182-en
    DOI: 10.1787/5js009mzrqd4-en
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    Citations

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    Cited by:

    1. Sabina Szymczak & Aleksandra Parteka & Joanna Wolszczak-Derlacz, 2019. "Position In Global Value Chains:The Impact On Wages In Central And Eastern European Countries," GUT FME Working Paper Series A 53, Faculty of Management and Economics, Gdansk University of Technology, revised Dec 2019.
    2. Yoshimichi Murakami & Nobuaki Hamaguchi, 2021. "Peripherality, income inequality, and economic development in Latin American countries," Oxford Development Studies, Taylor & Francis Journals, vol. 49(2), pages 133-148, April.
    3. Aleksandra Parteka & Joanna Wolszczak-Derlacz, 2019. "Global Value Chains and Wages: Multi-Country Evidence from Linked Worker-Industry Data," Open Economies Review, Springer, vol. 30(3), pages 505-539, July.
    4. Andoni Maiza & Ricardo Bustillo, 2018. "Analysis of the relevance of China’s development for main European automotive manufacturing countries," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 45(3), pages 403-424, September.
    5. Roeger, Werner & Varga, Janos & Veld, Jan in 't & Vogel, Lukas, 2021. "The distributional impact of labour market reforms: A model-based assessment," European Economic Review, Elsevier, vol. 131(C).
    6. Bank of Thailand, 2018. "Weighing up Thailand’s benefits from global value chains," BIS Papers chapters, in: Bank for International Settlements (ed.), Globalisation and deglobalisation, volume 100, pages 345-354, Bank for International Settlements.
    7. Nicola Gagliardi & Benoît Mahy & François Rycx, 2018. "Upstreamness, social upgrading and gender: Equal benefits for all?," Working Paper Research 359, National Bank of Belgium.
    8. Belen Barroeta & Javier Gomez Prieto & Jonatan Paton & Manuel Palazuelos Martinez & Marcelino Cabrera Giraldez, 2017. "Innovation and Regional Specialisation in Latin America," JRC Working Papers JRC106043, Joint Research Centre (Seville site).
    9. Nicola Gagliardi & Benoît Mahy & François Rycx, 2021. "Upstreamness, Wages and Gender: Equal Benefits for All?," British Journal of Industrial Relations, London School of Economics, vol. 59(1), pages 52-83, March.
    10. Martin Lábaj & Paula Puskarova, 2018. "Decomposition of wage inequalities: an input-output approach," Department of Economic Policy Working Paper Series 014, Department of Economic Policy, Faculty of National Economy, University of Economics in Bratislava.
    11. Pierre Kohler & Francis Cripps, 2018. "Do Trade and Investment (Agreements) Foster Development or Inequality?," GDAE Working Papers 18-03, GDAE, Tufts University.

    More about this item

    Keywords

    global value chains; globalisation; GVCs; income inequality; offshoring; trade in tasks;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F6 - International Economics - - Economic Impacts of Globalization
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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