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Are Your Labor Shares Set in Beijing? The View through the Lens of Global Value Chains

Ariell Reshef () and Gianluca Santoni ()

Working Papers from CEPII research center

Abstract: We study the evolution of labor shares in 1995-2014 while taking into account international trade based on value added concepts. On average, the decline in labor shares (starting around 1980) accelerates in 2001-2007, after which labor shares recover somewhat. In contrast, skilled labor shares consistently increase. The acceleration in the decline in labor shares is associated with increased intensity of intermediate input exporting; this manifests in a sharp increase in the foreign component in upstreamness of industries and countries in global value chains (GVCs). China's global integration accounts for much of this. Declines in the price of investment together with capital-skill complementarity can explain both the consistent increase in skilled labor shares and the reversal of trend in overall labor shares. Compared to shares in GDP, labor shares in gross national product (GNP) are higher in countries with positive net FDI positions; the uneven spread of multinational activity contributes to greater inequality through this channel.

Keywords: Labor Share; Skilled Labor Share; Global Value Chains; Offshoring; Vertical Integration (search for similar items in EconPapers)
JEL-codes: E25 F14 F15 F16 F66 J00 (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-cna, nep-eec, nep-int, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
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