IDEAS home Printed from https://ideas.repec.org/a/eee/streco/v69y2024icp124-142.html
   My bibliography  Save this article

Global value chains, wages, employment and labour production in China: A regional approach

Author

Listed:
  • Lu, Yuxin
  • Sica, Edgardo
  • Wolszczak-Derlacz, Joanna

Abstract

In this study we analyse the relationship of trade and global value chains (GVCs) to the labour market in 31 Chinese provinces for 25 sectors, by means of a system of structural equations. We firstly distinguish between provincial value chains (PVCs) and interprovincial value chains (PRVCs) in order to outline their distribution and evolution over time. Then, we investigate to what extent participation in GVCs, PVCs and PRVCs – along with trading in final goods and services – is associated with labour market outcomes, i.e., wages, employment and labour production. The results suggest that provinces/sectors with greater export penetration have higher employment and labour production, but lower wages. On the other hand, however, GVCs are found to impede growth in employment and labour production.

Suggested Citation

  • Lu, Yuxin & Sica, Edgardo & Wolszczak-Derlacz, Joanna, 2024. "Global value chains, wages, employment and labour production in China: A regional approach," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 124-142.
    • Handle: RePEc:eee:streco:v:69:y:2024:i:c:p:124-142
    DOI: 10.1016/j.strueco.2023.12.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0954349X23001790
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.strueco.2023.12.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ben Shepherd, 2013. "Global Value Chains and Developing Country Employment: A Literature Review," OECD Trade Policy Papers 156, OECD Publishing.
    2. Yang, Shanping & Martinez-Zarzoso, Inmaculada, 2014. "A panel data analysis of trade creation and trade diversion effects: The case of ASEAN–China Free Trade Area," China Economic Review, Elsevier, vol. 29(C), pages 138-151.
    3. Yue Lu & Yunlong Lu & Rui Xie & Xiao Yu, 2019. "Does global value chain engagement improve firms' wages: Evidence from China," The World Economy, Wiley Blackwell, vol. 42(10), pages 3065-3085, October.
    4. Naila Kabeer & Simeen Mahmud, 2004. "Globalization, gender and poverty: Bangladeshi women workers in export and local markets," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(1), pages 93-109.
    5. Xiao JIANG, 2015. "Employment effects of trade in intermediate and final goods: An empirical assessment," International Labour Review, International Labour Organization, vol. 154(2), pages 147-164, June.
    6. Brian Aitken & Ann Harrison & Robert E. Lipsey, 2022. "Wages and foreign ownership A comparative study of Mexico, Venezuela, and the United States," World Scientific Book Chapters, in: Globalization, Firms, and Workers, chapter 4, pages 61-87, World Scientific Publishing Co. Pte. Ltd..
    7. Hiau Looi Kee & Heiwai Tang, 2016. "Domestic Value Added in Exports: Theory and Firm Evidence from China," American Economic Review, American Economic Association, vol. 106(6), pages 1402-1436, June.
    8. Olivier Blanchard & Jordi Galí, 2007. "Real Wage Rigidities and the New Keynesian Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(s1), pages 35-65, February.
    9. Niu Fangqu & Li Jun, 2019. "Visualizing the intercity highway network in Mainland China," Environment and Planning A, , vol. 51(6), pages 1213-1216, September.
    10. José G. Caraballo & Xiao Jiang, 2016. "Value-Added Erosion in Global Value Chains: An Empirical Assessment," Journal of Economic Issues, Taylor & Francis Journals, vol. 50(1), pages 288-296, January.
    11. Gene M. Grossman & Esteban Rossi-Hansberg, 2008. "Trading Tasks: A Simple Theory of Offshoring," American Economic Review, American Economic Association, vol. 98(5), pages 1978-1997, December.
    12. MILE 02, Anirudh Shingal, 2015. "Labour market effects of integration into GVCs: Review of literature," Papers 1109, World Trade Institute.
    13. David H. Autor & David Dorn & Gordon H. Hanson, 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," American Economic Review, American Economic Association, vol. 103(6), pages 2121-2168, October.
    14. Rodrigo Adao & Costas Arkolakis & Federico Esposito, 2018. "Trade, Agglomeration Effects, and Labor Markets: Theory and Evidence," 2018 Meeting Papers 545, Society for Economic Dynamics.
    15. Yi Zhu & Mi Diao & Gang Fu, 2016. "The evolution of accessibility surface of China in the high-speed-rail era," Environment and Planning A, , vol. 48(11), pages 2108-2111, November.
    16. Lin Justin Yifu & Xiaobing Wang, 2022. "Dual Circulation: a New Structural Economics view of development," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 20(4), pages 303-322, October.
    17. Ge, Jiali & Fu, Yang & Xie, Rui & Liu, Yu & Mo, Wenyang, 2018. "The effect of GVC embeddedness on productivity improvement: From the perspective of R&D and government subsidy," Technological Forecasting and Social Change, Elsevier, vol. 135(C), pages 22-31.
    18. Lorenzo Caliendo & Maximiliano Dvorkin & Fernando Parro, 2019. "Trade and Labor Market Dynamics: General Equilibrium Analysis of the China Trade Shock," Econometrica, Econometric Society, vol. 87(3), pages 741-835, May.
    19. Baldwin, Richard & Robert-Nicoud, Frédéric, 2014. "Trade-in-goods and trade-in-tasks: An integrating framework," Journal of International Economics, Elsevier, vol. 92(1), pages 51-62.
    20. Kang, Meiling & Li, Yucheng & Zhao, Zhongkuang & Song, Min & Yi, Jun, 2023. "Travel costs and inter-city collaborative innovation: Evidence of high-speed railway in China," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 286-302.
    21. Fang, Jiayu & Tang, Xue & Xie, Rui & Han, Feng, 2020. "The effect of manufacturing agglomerations on smog pollution," Structural Change and Economic Dynamics, Elsevier, vol. 54(C), pages 92-101.
    22. Wang, Wenxiao & Thangavelu, Shandre & Lin, Faqin, 2021. "Global value chains, firms, and wage inequality: Evidence from China," China Economic Review, Elsevier, vol. 66(C).
    23. Chen, Hanxue & Wang, Shuhong & Song, Malin, 2021. "Global Environmental Value Chain Embeddedness and Enterprise Production Efficiency Improvement," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 278-290.
    24. Cristina Constantinescu & Aaditya Mattoo & Michele Ruta, 2019. "Does vertical specialisation increase productivity?," The World Economy, Wiley Blackwell, vol. 42(8), pages 2385-2402, August.
    25. Jie Wu & Jacob Wood & Xianhai Huang, 2021. "How does GVC reconstruction affect economic growth and employment? Analysis of USA–China decoupling," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 35(1), pages 67-81, May.
    26. Lurong Chen & Philippe De Lombaerde, 2013. "China moving up the value chain: What can be learned from the Asian NICs?," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 16(4), pages 407-430, December.
    27. Rui Xie & Meng Niu & Bin Su & Jiali Ge, 2021. "Are global value chains merely global? The case of Chinese Provinces in global value chains," Applied Economics, Taylor & Francis Journals, vol. 53(32), pages 3778-3794, July.
    28. Jing Wang & Morley Gunderson, 2011. "Minimum Wage Impacts In China: Estimates From A Prespecified Research Design, 2000–2007," Contemporary Economic Policy, Western Economic Association International, vol. 29(3), pages 392-406, July.
    29. Nikulin, Dagmara & Wolszczak-Derlacz, Joanna, 2022. "GVC involvement and the gender wage gap: Micro-evidence on European countries," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 268-282.
    30. Daria Taglioni & Deborah Winkler, 2016. "Making Global Value Chains Work for Development," World Bank Publications - Books, The World Bank Group, number 24426, December.
    31. Ze Zhang & Tong Cai, 2020. "Delta-shaped openness: Visualizing the foreign capital in mainland China," Environment and Planning A, , vol. 52(1), pages 3-5, February.
    32. Tristan Kohl, 2019. "The Belt and Road Initiative’s effect on supply-chain trade: evidence from structural gravity equations," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 12(1), pages 77-104.
    33. Penny Bamber & Karina Fernandez-Stark & Gary Gereffi & Andrew Guinn, 2014. "Connecting Local Producers in Developing Countries to Regional and Global Value Chains: Update," OECD Trade Policy Papers 160, OECD Publishing.
    34. Khalid Nadvi & John T. Thoburn & Bui Tat Thang & Nguyen Thi Thanh Ha & Nguyen Thi Hoa & Dao Hong Le & Enrique Blanco De Armas, 2004. "Vietnam in the global garment and textile value chain: impacts on firms and workers," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(1), pages 111-123.
    35. Lafang Wang & Bin Zhang & Rui Xie & Bin Su, 2020. "The drivers of export value-added in China’s provinces: a multi-regional input–output model," Applied Economics, Taylor & Francis Journals, vol. 52(57), pages 6199-6214, December.
    36. John Baldwin & Beiling Yan, 2021. "Globalization, Productivity Performance, and the Transformation of the Production Process," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(4), pages 1088-1115, October.
    37. Zhang, Pingdan & Yuan, Haoming & Bai, Fuli & Tian, Xin & Shi, Feng, 2018. "How do carbon dioxide emissions respond to industrial structural transitions? Empirical results from the northeastern provinces of China," Structural Change and Economic Dynamics, Elsevier, vol. 47(C), pages 145-154.
    38. Ge, Ying & Dollar, David & Yu, Xinding, 2020. "Institutions and participation in global value chains: Evidence from belt and road initiative," China Economic Review, Elsevier, vol. 61(C).
    39. Yu, Linhui & Zhao, Dan & Niu, Haixia & Lu, Futao, 2020. "Does the belt and road initiative expand China's export potential to countries along the belt and road?," China Economic Review, Elsevier, vol. 60(C).
    40. Karishma Banga, 2022. "Impact of global value chains on total factor productivity: The case of Indian manufacturing," Review of Development Economics, Wiley Blackwell, vol. 26(2), pages 704-735, May.
    41. Rosanna Pittiglio & Filippo Reganati & Edgardo Sica, 2015. "Do Multinational Enterprises Push up the Wages of Domestic Firms in the Italian Manufacturing Sector?," Manchester School, University of Manchester, vol. 83(3), pages 346-378, June.
    42. Hongbin Li & Lei Li & Binzhen Wu & Yanyan Xiong, 2012. "The End of Cheap Chinese Labor," Journal of Economic Perspectives, American Economic Association, vol. 26(4), pages 57-74, Fall.
    43. Vivian W. Chen & Harry X. Wu & Bart Van Ark, 2009. "More Costly Or More Productive? Measuring Changes In Competitiveness In Manufacturing Across Regions In China," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(s1), pages 514-537, July.
    44. Zhang Yuqin & Wang Shouyang, 2015. "Trade Potential of China’s Export to ASEAN: The Gravity Model Using New Economic Mass Proxies," Journal of Systems Science and Information, De Gruyter, vol. 3(5), pages 411-420, October.
    45. Shanzi Ke & Edward Feser, 2010. "Count on the Growth Pole Strategy for Regional Economic Growth? Spread-Backwash Effects in Greater Central China," Regional Studies, Taylor & Francis Journals, vol. 44(9), pages 1131-1147.
    46. Muhammad Daaniyall Abd Rahman & Mohd Yusof Saari & Manfred Lenzen & Arunima Malik, 2022. "Skills and ethnics wage inequalities within the global value chain: an evidence from Malaysia," Policy Studies, Taylor & Francis Journals, vol. 43(1), pages 56-75, January.
    47. Joanna Wolszczak-Derlacz & Yuxin Lu, 2022. "The role of the One-Belt One-Road initiative in China’s exports and global value chains," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 17(2), pages 317-341, June.
    48. Zhenshan Yang & Michael Dunford, 2018. "City shrinkage in China: scalar processes of urban and hukou population losses," Regional Studies, Taylor & Francis Journals, vol. 52(8), pages 1111-1121, August.
    49. Wenxiao Wang & Christopher Findlay & Shandre Thangavelu, 2021. "Trade, technology, and the labour market: impacts on wage inequality within countries," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 35(1), pages 19-35, May.
    50. Rosanna Pittiglio & Filippo Reganati, 2016. "Vertical Spillovers from Multinational Enterprises: Does Technological Gap Matter?," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 63(3), pages 313-323, June.
    51. Johnson, Robert C. & Noguera, Guillermo, 2012. "Accounting for intermediates: Production sharing and trade in value added," Journal of International Economics, Elsevier, vol. 86(2), pages 224-236.
    52. Xiangfeng Meng & Ying Long, 2022. "Shrinking cities in China: Evidence from the latest two population censuses 2010–2020," Environment and Planning A, , vol. 54(3), pages 449-453, May.
    53. Sabina Szymczak & Aleksandra Parteka & Joanna Wolszczak-Derlacz, 2022. "Position in global value chains and wages in Central and Eastern European countries," European Journal of Industrial Relations, , vol. 28(2), pages 211-230, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. MILE 02, Anirudh Shingal, 2015. "Labour market effects of integration into GVCs: Review of literature," Papers 1109, World Trade Institute.
    2. Nenci, Silvia & Fusacchia, Ilaria & Giunta, Anna & Montalbano, Pierluigi & Pietrobelli, Carlo, 2022. "Mapping global value chain participation and positioning in agriculture and food: stylised facts, empirical evidence and critical issues," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 11(2), July.
    3. Joanna Wolszczak-Derlacz & Yuxin Lu, 2022. "The role of the One-Belt One-Road initiative in China’s exports and global value chains," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 17(2), pages 317-341, June.
    4. Choorikkad Veeramani & Garima Dhir, 2022. "Do developing countries gain by participating in global value chains? Evidence from India," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(4), pages 1011-1042, November.
    5. Pol Antràs & Davin Chor, 2021. "Global Value Chains," NBER Working Papers 28549, National Bureau of Economic Research, Inc.
    6. Stojčić, Nebojša & Matić, Matija, 2024. "A journey toward global value chain upgrading: Exploring the transition from backward to forward integration," Technology in Society, Elsevier, vol. 76(C).
    7. Reddy, Ketan & Sasidharan, Subash, 2024. "Global value chains, productivity and markup: Evidence from India," International Review of Economics & Finance, Elsevier, vol. 89(PB), pages 250-271.
    8. Aleksandra Parteka & Joanna Wolszczak-Derlacz, 2020. "Wage response to global production links: evidence for workers from 28 European countries (2005–2014)," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(4), pages 769-801, November.
    9. David Hummels & Jakob R. Munch & Chong Xiang, 2018. "Offshoring and Labor Markets," Journal of Economic Literature, American Economic Association, vol. 56(3), pages 981-1028, September.
    10. Shen, Leilei & Silva, Peri, 2018. "Value-added exports and U.S. local labor markets: Does China really matter?," European Economic Review, Elsevier, vol. 101(C), pages 479-504.
    11. Huang, Xiaobing & Xie, Jiawei, 2024. "The impact of input efficiency on the value chain embeddedness of rare earth enterprises," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 604-616.
    12. Reshef, Ariell & Santoni, Gianluca, 2023. "Are your labor shares set in Beijing? The view through the lens of global value chains," European Economic Review, Elsevier, vol. 155(C).
    13. Marcel P Timmer & Sébastien Miroudot & Gaaitzen J de Vries, 2019. "Functional specialisation in trade," Journal of Economic Geography, Oxford University Press, vol. 19(1), pages 1-30.
    14. Aichele, Rahel & Heiland, Inga, 2018. "Where is the value added? Trade liberalization and production networks," Journal of International Economics, Elsevier, vol. 115(C), pages 130-144.
    15. Parteka, Aleksandra & Wolszczak-Derlacz, Joanna & Nikulin, Dagmara, 2024. "How digital technology affects working conditions in globally fragmented production chains: Evidence from Europe," Technological Forecasting and Social Change, Elsevier, vol. 198(C).
    16. Antimiani, Alessandro & Fusacchia, Ilaria & Salvatici, Luca, 2016. "Value Added Trade Restrictiveness Indexes. Measuring Protection with Global Value Chains," Conference papers 332745, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    17. Jangam, Bhushan Praveen & Rath, Badri Narayan, 2020. "Cross-country convergence in global value chains: Evidence from club convergence analysis," International Economics, Elsevier, vol. 163(C), pages 134-146.
    18. Victor Kummritz, 2015. "Global Value Chains: Benefiting the Domestic Economy?," IHEID Working Papers 02-2015, Economics Section, The Graduate Institute of International Studies.
    19. Basu, Anwesha & Marjit, Sugata & Veeramani, C., 2024. "Growth gains from offshore outsourcing," Journal of Policy Modeling, Elsevier, vol. 46(1), pages 90-112.
    20. Dominik Boddin, 2016. "The Role of Newly Industrialized Economies in Global Value Chains," IMF Working Papers 2016/207, International Monetary Fund.

    More about this item

    Keywords

    Chinese provinces; GVC; Wages; Labour production; Employment;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F2 - International Economics - - International Factor Movements and International Business
    • F6 - International Economics - - Economic Impacts of Globalization

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:streco:v:69:y:2024:i:c:p:124-142. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/525148 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.