Factor Incomes in Global Value Chains: The Role of Intangibles

Wen Chen, Bart Los and Marcel Timmer

No 25242, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Recent studies document a decline in the share of labour and a simultaneous increase in the share of residual (‘factorless’) income in national GDP. We argue the need for study of factor incomes in cross-border production to complement country studies. We define a GVC production function that tracks the value added in each stage of production in any country-industry. We define a new residual as the difference between the value of the final good and the payments to all tangibles (capital and labour) in any stage. We focus on GVCs of manufactured goods and find the residual to be large. We interpret it as income for intangibles that are (mostly) not covered in current national accounts statistics. We document decreasing labour and increasing capital income shares over the period 2000-14. This is mainly due to increasing income for intangible assets, in particular in GVCs of durable goods. We provide evidence that suggests that the 2000s should be seen as an exceptional period in the global economy during which multinational firms benefitted from reduced labour costs through offshoring, while capitalising on existing firm-specific intangibles, such as brand names, at little marginal cost.

JEL-codes: E01 E22 F62 (search for similar items in EconPapers)
Date: 2018-11
New Economics Papers: this item is included in nep-acc, nep-int, nep-mac and nep-opm
Note: EFG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

Published as Factor Incomes in Global Value Chains: The Role of Intangibles , Wen Chen, Bart Los, Marcel P. Timmer. in Measuring and Accounting for Innovation in the Twenty-First Century , Corrado, Haskel, Miranda, and Sichel. 2021

Downloads: (external link)
http://www.nber.org/papers/w25242.pdf (application/pdf)

Related works:
Chapter: Factor Incomes in Global Value Chains: The Role of Intangibles (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:25242

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w25242

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().