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Skip to Content Japanese English Chinese About RIETI Site Map Help Contact Discussion Papers Search Site Search Menu Research Areas Research Programs (FY2024-2028) Research Programs (FY2020-2023) Research Programs (FY2016-2019) Research Programs (FY2011-2015) Policy Research Domains (FY2006-2010) Projects Survey Fellows According to Title Alphabetical order RIETI Alumni Research/Policy Papers Discussion Papers (English) Discussion Papers (Japanese) Policy Discussion Papers (English) Policy Discussion Papers (Japanese) Technical Papers (English) Technical Papers (Japanese) Non Technical Summaries List of Articles in Journals Research Digest Discussion Papers Search Publications RIETI Books (English) RIETI Books (Japanese) History of Japan's Trade and Industry Policy Authors' Words Other Publications (English) Other Publications (Japanese) Events Symposiums Workshops BBL Seminars Archived Seminar Series Data JIP Database R-JIP Database CIP Database Industry-Specific Nominal and Real Effective Exchange Rates AMU and AMU Deviation Indicators JSTAR RIETI-TID RIETI FDI Database ICPA Project Links Articles Column Special Series Newspapers & Magazines Fellows' Works VoxEU Column From IZA Perspectives from Around the World Other Contents RIETI Report Policy Update Keizai Sangyo Journal (METI Journal) Research Areas Fellows Research/Policy Papers Publications Events Data Articles Site Map Technical Issues Coontact Discussion Papers Search Close HomeArticlesFrom IZA From IZA Do global value chains create jobs?Impacts of GVCs depend on lead firms, specialization, skills, and institutions Tweet Print Thomas FAROLE Senior Economist in the World Bank’s Africa Department Elevator pitch Global value chains (GVCs) describe the cross-national activities and inputs required to bring a product or service to the market. While they can boost exports and productivity, the resulting labor market impacts vary significantly across developing countries. Some experience large-scale manufacturing employment, while others see a shift in demand for labor from manufacturing to services, and from lower to higher skills. Several factors shape the way in which a country's labor market will be impacted by GVC integration, including the type of sector, lead firms' strategies, domestic skills base, and the institutional environment. Key findings Pros The employment effects of GVC integration are mixed in developing countries, with both winners and losers emerging in the process.Labor market impacts go well beyond jobs and include changes in relative payoffs to skills, levels of inclusion, and skills development (upgrading) potential. Some of the key determinants of labor market outcomes in GVCs are not within the control of domestic policy. Women take a large share of jobs in labor-intensive chains, but lose out from upgrading. Cons In most high-income countries, higher-skilled workers gain in terms of rising wages, but lower-skilled workers experience greater job losses. Countries with large labor surpluses and low wages have seen strong jobs growth following GVC integration. Patterns across countries show that as sectors and countries upgrade, wages rise but net employment falls, and more skilled workers gain most. Raising labor standards in GVCs appears to be a win-win proposition overall, with workers benefiting from improved conditions and firms experiencing productivity gains. Author's main message GVC integration may be a catalyst for job creation, but its employment effects are complex and difficult to control domestically. Large-scale job creation in GVCs may require sustained low wages, and labor and skills upgrading may worsen both inequalities and outcomes for low-skilled and female workers. Policy should focus more on the productivity gains associated with GVC integration rather than its role as a source of job creation. Policies to support supply-chain deepening and exploit technology spillovers, with a strong focus on skills development, will support an adaptable labor force positioned to maximize the dynamic potential from GVCs. Download full article (PDF) This article first appeared on IZA World of Labor in August 2016. Reproduced with permission Tweet October 18, 2016 Print Article(s) by this author Do global value chains create jobs?Impacts of GVCs depend on lead firms, specialization, skills, and institutions October 18, 2016[From IZA] Articles Column Special Series Newspapers & Magazines Fellows' Works VoxEU Column From IZA Perspectives from Around the World Other Contents RIETI Report Policy Update Keizai Sangyo Journal Communications Newsletter RSS Feed Facebook X YouTube Research Areas Research Programs (FY2024-2028) Research Programs (FY2020-2023) Research Programs (FY2016-2019) Research Programs (FY2011-2015) Policy Research Domains (FY2006-2010) Projects Survey Fellows Research/Policy Papers Discussion Papers (English) Discussion Papers (Japanese) Policy Discussion Papers (English) Policy Discussion Papers (Japanese) Technical Papers (English) Technical Papers (Japanese) Non Technical Summaries List of Articles in Journals Research Digest Discussion Papers Search Publications RIETI Books (English) RIETI Books (Japanese) History of Japan's Trade and Industry Policy Authors' Words Other Publications (English) Other Publications (Japanese) Events Symposiums Workshops BBL Seminars Archived Seminar Series Data JIP Database R-JIP Database CIP Database Industry-Specific Nominal and Real Effective Exchange Rates AMU and AMU Deviation Indicators JSTAR RIETI-TID RIETI FDI Database ICPA Project Links Articles Column Special Series Newspapers & Magazines Fellows' Works VoxEU Column From IZA Perspectives from Around the World Other Contents RIETI Report Policy Update Keizai Sangyo Journal (METI Journal) About RIETI Privacy Policy Site Policy Site Map Help Contact METI Web Site Research Institute of Economy, Trade and Industry, IAA (JCN 6010005005426)JCN: Japan Corporate Number Opinions expressed or implied on this website are solely those of the author, and do not necessarily represent the views of the Research Institute of Economy, Trade and Industry (RIETI).Titles, numbers, specific names, etc. on this website are as of the date of publication. 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