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The Employment Effects of Technological Innovation, Consumption, and Participation in Global Value Chains: Evidence from Developing Asia

Author

Listed:
  • Bertulfo, Donald Jay

    () (Asian Development Bank)

  • Gentile, Elisabetta

    () (Asian Development Bank)

  • de Vries , Gaaitzen J.

    () (University of Groningen)

Abstract

Global value chains (GVCs) have been a vehicle for job creation in developing Asia, but there is mounting concern that more sophisticated and cost-effective technology could displace workers through automation or reshoring of production. We use the demand-based input–output approach in Reijnders and de Vries (2018) to examine how employment responded to consumption, trade, and technological advances in 12 economies that accounted for 90% of employment in developing Asia during the period 2005–2015. Structural decomposition analysis based on the Asian Development Bank Multiregional Input–Output Tables combined with harmonized cross-country occupation data indicates that, other things being equal, technological change within GVCs was associated with a decrease in labor demand across all sectors, and an increase in the share of nonroutine cognitive occupations. We also find that increased domestic consumption expenditures of goods and services generated an increase in labor demand large enough to offset the negative employment impact of technological change. Finally, we do not find evidence of major shifts in occupational labor demand due to reshoring.

Suggested Citation

  • Bertulfo, Donald Jay & Gentile, Elisabetta & de Vries , Gaaitzen J., 2019. "The Employment Effects of Technological Innovation, Consumption, and Participation in Global Value Chains: Evidence from Developing Asia," ADB Economics Working Paper Series 572, Asian Development Bank.
  • Handle: RePEc:ris:adbewp:0572
    as

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    References listed on IDEAS

    as
    1. Guy Michaels & Ashwini Natraj & John Van Reenen, 2010. "Has ICT Polarized Skill Demand? Evidence from Eleven Countries over 25 Years," CEP Discussion Papers dp0987, Centre for Economic Performance, LSE.
    2. Fabrice Defever, 2012. "The spatial organization of multinational firms," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(2), pages 672-697, May.
    3. Fabrice Defever, 2012. "The spatial organization of multinational firms," Canadian Journal of Economics, Canadian Economics Association, vol. 45(2), pages 672-697, May.
    4. Erik Dietzenbacher & Bart Los, 1998. "Structural Decomposition Techniques: Sense and Sensitivity," Economic Systems Research, Taylor & Francis Journals, vol. 10(4), pages 307-324.
    5. Maarten Goos & Alan Manning & Anna Salomons, 2014. "Explaining Job Polarization: Routine-Biased Technological Change and Offshoring," American Economic Review, American Economic Association, vol. 104(8), pages 2509-2526, August.
    6. Guy Michaels & Ashwini Natraj & John Van Reenen, 2014. "Has ICT Polarized Skill Demand? Evidence from Eleven Countries over Twenty-Five Years," The Review of Economics and Statistics, MIT Press, vol. 96(1), pages 60-77, March.
    7. Bart Los & Marcel P. Timmer & Gaaitzen J. De Vries, 2014. "The Demand for Skills 1995-2008: A Global Supply Chain Perspective," OECD Economics Department Working Papers 1141, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    developing Asia; employment; global value chains; reshoring; task relocation; technology;

    JEL classification:

    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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