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Impact of Global Value Chains on Wage in Snake and Spider Configurations: An Empirical Analysis based on WIOD Countries

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  • Kokou Wotodjo Tozo
  • Jiong Gong

Abstract

Whether and why one should ‘join a snake or a spider global value chain (GVC)’ is a debate that has received little attention in economic literature. In this paper, we try to compare the effects of the GVCs on wage in both configurations between working skill categories across many countries and industries. The aim pursued is to show which GVC generates better wage in a particular context –especially at skill, country development or industrial level. To distinguish spider from snake, we use the mean value of the weighted average number of border crossing (ABC) proposed by Muradov (2016) and its variant indexed by the UIBE Research Institute of GVC (RIGVC of UIBE). The sample is a panel data of 36 countries selected from the World Input-Output Database (WIOD), spanning 10 years (2000-2009) and 9 industries. By employing the Hausman-Taylor technique, we found that in general, GVCs bring positive gains to workers of all skill categories. These effects tend to be higher for high-skill workers and for those engaged in snake GVCs. Furthermore, the impacts appear more significant in snake for workers in developed countries. On the other hand, these effects are stronger only in spider in developing countries. At industry level, the pair snake-manufacturing display more significant estimates. These findings are meant to inform policymakers on the choice of GVCs. In fact, joining a GVC may require a minutious understanding of its configuration.

Suggested Citation

  • Kokou Wotodjo Tozo & Jiong Gong, 2020. "Impact of Global Value Chains on Wage in Snake and Spider Configurations: An Empirical Analysis based on WIOD Countries," International Journal of Science and Business, IJSAB International, vol. 4(4), pages 79-97.
    • Handle: RePEc:aif:journl:v:4:y:2020:i:4:p:79-97
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    References listed on IDEAS

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    1. Baldwin, Richard E. & Robert-Nicoud, Frédéric, 2007. "Offshoring: general equilibrium effects on wages, production and trade," LSE Research Online Documents on Economics 19720, London School of Economics and Political Science, LSE Library.
    2. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
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