Effects of backward GVC participation on labor market: Micro-level evidence from India

Deepali Gupta () and C. Veeramani ()
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Deepali Gupta: Indira Gandhi Institute of Development Research
C. Veeramani: Centre for Development Studies

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: Several studies show that countries increasingly participate in Global Value Chains (GVC) by specialising in intermediate goods. Theoretical fragmentation models sug gest that backward GVC participation has a double advantage for a low-skilled, labour abundant country like India. It increases employment, and it reduces wage inequality. This paper assesses the impact of backward GVC participation on employment, wages, and labour productivity of workers engaged in Indian organised manufacturing indus tries. We use plant-level data provided by the Annual Survey of Industries (ASI) for 2008-09 till 2019-20. We find that GVC plants employ more workers and pay higher wages but find no significant differences in labour productivity. The share of female and contractual workers is not significantly different from non-GVC plants, but the share of production workers is slightly higher in GVC plants. We also find a lower wage gap between male and female workers; and contractual and non-contractual workers but a higher wage gap between production and non-production workers for GVC plants.

Keywords: Global value chains; Backward GVC participation; Employment; Wage Inequality; India (search for similar items in EconPapers)
JEL-codes: F14 F16 F66 J24 J31 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2025-03
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