The purpose of this paper is to provide econometric evidence on the links between Global Value
Chains (GVCs) and labour markets, focusing on developing economies, particularly the OECD’s Key
Partner countries (Brazil, India, Indonesia, China, and South Africa). The literature generally indicates that
firms with international linkages—which we use here as a proxy for GVC involvement—tend to employ
more workers, pay higher wages, and employ more skilled workers than firms that deal exclusively with
the domestic market. Because of their capacity to act as vectors of skill-biased technical change,
internationalization of firms can also be associated with increased wage inequality. All of these findings
depend to some extent, however, on the countries involved and the types of activities undertaken by the
firms involved in the study. The labour market impacts of assembly operations—which are relatively low
wage and low skill—are different from those of more high technology production processes, which tend to
be associated with stronger relative demand for skilled labour and higher relative wages. Thus, the
evidence from developed countries may not apply to developing economies.
The purpose of this paper is to provide econometric evidence on the links between Global Value
Chains (GVCs) and labour markets, focusing on developing economies, particularly the OECD’s Key
Partner countries (Brazil, India, Indonesia, China, and South Africa). The literature generally indicates that
firms with international linkages—which we use here as a proxy for GVC involvement—tend to employ
more workers, pay higher wages, and employ more skilled workers than firms that deal exclusively with
the domestic market. Because of their capacity to act as vectors of skill-biased technical change,
internationalization of firms can also be associated with increased wage inequality. All of these findings
depend to some extent, however, on the countries involved and the types of activities undertaken by the
firms involved in the study. The labour market impacts of assembly operations—which are relatively low
wage and low skill—are different from those of more high technology production processes, which tend to
be associated with stronger relative demand for skilled labour and higher relative wages. Thus, the
evidence from developed countries may not apply to developing economies.
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