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Value-chain activities and individual wages

Laura Márquez-Ramos (Institute for International Trade, University of Adelaide, Adelaide, Australia and Department of Economics, Universitat Jaume I, Castellón de la Plana, Spain)

Critical Perspectives on International Business

ISSN: 1742-2043

Article publication date: 19 December 2018

Issue publication date: 20 May 2021

451

Abstract

Purpose

The purpose of this paper is to contribute to a better understanding of whether emerging economies benefit or suffer more because of value-chain activities than advanced economies do. Specifically, it focuses on the consequences in terms of individual wages.

Design/methodology/approach

Panel data techniques are used to estimate an expanded Mincerian wage equation over the period 1995-2007. The analysis is performed using micro-level data for two countries that represent two different experiences of value-chain activities in Central Europe: Germany and Slovenia.

Findings

Increasing value-chain activities reduce wages for low-skilled workers in high-skill-intensive industries in Germany, hence driving up the skill wage premium. Conversely, evidence is found of a decreasing skill wage premium as a consequence of increasing value-chain activities in Slovenia. Finally, increasing value-chain activities reduces the wages of workers in low-skill-intensive industries in both Germany and Slovenia.

Originality/value

This paper analyses the effect of value-chain activities on wages. It is the first empirical assessment that brings individual wage data directly into the picture for an international comparison focussed on two Central European countries that represent “two faces” of value chains. This paper shows that the effects of increasing value-chain activities on wages differ by country, by industry and by individual skills.

Keywords

Acknowledgements

This paper forms part of a special section “Do Multinational Enterprises Contribute to, or Reduce Global Inequality?”, guest edited by Sasha Zhao.

Citation

Márquez-Ramos, L. (2021), "Value-chain activities and individual wages", Critical Perspectives on International Business, Vol. 17 No. 1, pp. 53-71. https://doi.org/10.1108/cpoib-12-2017-0102

Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

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