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The Role of Global Value Chains for Worker Tasks and Wage Inequality

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  • Lewandowski,Piotr
  • Madoń,Karol
  • Winkler,Deborah Elisabeth

Abstract

This paper studies the relationship between participation in global value chains, worker routinetask intensity, and within-country wage inequality. It uses unique survey data from 47 countries across the developmentspectrum to calculate worker-level, country-specific routine task intensity and combines them with sectoral measures ofbackward and forward global value chains participation. Higher global value chains participation is associated withmore routine-intensive work, specifically among offshorable occupations, especially in countries at lower developmentlevels. The results by broad sectors contrast sharply: higher global value chains participation is linked to ahigher routine task intensity in offshorable occupations in the industry but a lower routine task intensity innon-offshorable occupations in business services. Higher worker-level routine task intensity is strongly associatedwith lower wages, so global value chains participation indirectly widens the within-country wage inequality throughthis routine task intensity channel. At the same time, global value chains participation directly contributes toreduced wage inequality, except for the richest countries. Overall, this analysis finds that global value chainsparticipation reduces wage inequality in most low- and middle-income countries that receive offshored jobs butwidens wage inequality in high-income countries that offshore jobs.

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  • Lewandowski,Piotr & Madoń,Karol & Winkler,Deborah Elisabeth, 2023. "The Role of Global Value Chains for Worker Tasks and Wage Inequality," Policy Research Working Paper Series 10433, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10433
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    More about this item

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor

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