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

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.

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