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The Impact of Production Fragmentation on Industry Skill Upgrading: New Evidence from Japanese Manufacturing

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  • Nobuaki Yamashita

Abstract

This paper examines the hypothesis that industries engaged in international fragmentation of production experience greater skill upgrading using a panel dataset of Japanese manufacturing over the period 1980-2000. The novelty of the study comes from the use of an index newly constructed using data on trade in parts and components to measure inter-industry variations in the degree of international vertical specialization (fragmentation intensity of trade). It also employs a methodology designed to embody peculiarities of Japan's fragmentation trade pattern. While the findings of existing studies are inconclusive, we find that the expansion of fragmentation trade with developing East Asian countries has had a significant impact on the skills composition of Japanese manufacturing employment. By contrast, trade with high income countries seems to have had a skill downgrading effect.

Suggested Citation

  • Nobuaki Yamashita, 2007. "The Impact of Production Fragmentation on Industry Skill Upgrading: New Evidence from Japanese Manufacturing," Hi-Stat Discussion Paper Series d06-202, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hst:hstdps:d06-202
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    File URL: http://hi-stat.ier.hit-u.ac.jp/research/discussion/2006/pdf/D06-202.pdf
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    Cited by:

    1. Athukorala, Prema-chandra & Yamashita, Nobuaki, 2006. "Production fragmentation and trade integration: East Asia in a global context," The North American Journal of Economics and Finance, Elsevier, vol. 17(3), pages 233-256, December.
    2. Sanghoon Ahn & Kyoji Fukao & Keiko Ito, 2008. "The Impact of Outsourcing on the Japanese and South Korean Labor Markets: International Outsourcing of Intermediate Inputs and Assembly in East Asia," Global COE Hi-Stat Discussion Paper Series gd08-001, Institute of Economic Research, Hitotsubashi University.

    More about this item

    Keywords

    International Fragmentation of Production; Skill Upgrading; Japanese Manufacturing;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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