 GLOBAL VALUE CHAINS AND RELATIVE LABOUR DEMAND: A GEOMETRIC SYNTHESIS OF NEOCLASSICAL TRADE MODELSLoe Franssen () Journal of Economic Surveys, 2019, vol. 33, issue 4, 1232-1256 Abstract: Technological advancements and reductions in trade tariffs have made it increasingly profitable for firms to separate their production into individual tasks, creating global value chains (GVCs). The theoretical literature on the distributional effects of GVCs is large, but ambiguous. Since the early conception of Jones' general equilibrium model in 1965, there seems to have been a tendency to repackage (part of) this model, generating apparent conflicts and implicit overlaps. This paper goes back to the basics by using the dual nature of the production model in Jones to provide a geometric exposition of the main channels by which GVCs can affect the relative demand for skilled labour. The explanatory power of this figure is vast. First, it can synthesize the ambiguous literature in a coherent and intuitive framework and show how subtle modelling differences can have widespread effects on key predictions. Second, it can serve as a conceptual framework and as a guide to empirical analysis. Third, it can be used as an illustration of key models explaining global value chains. Ultimately, the proposed figure can be used as a pedagogical tool for policy makers and (under)graduate students alike, without the need to understand complex algebra. Date: 2019 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:jecsur:v:33:y:2019:i:4:p:1232-1256 Ordering information: This journal article can be ordered from Access Statistics for this article More articles in Journal of Economic Surveys from Wiley Blackwell |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.