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Value-chain activities and individual wages

Value-chain activities and individual wages 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/approachPanel 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.FindingsIncreasing 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/valueThis 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png critical perspectives on international business Emerald Publishing

Value-chain activities and individual wages

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1742-2043
DOI
10.1108/cpoib-12-2017-0102
Publisher site
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Abstract

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/approachPanel 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.FindingsIncreasing 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/valueThis 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.

Journal

critical perspectives on international business – Emerald Publishing

Published: May 20, 2021

Keywords: Germany; Slovenia; Individual wages; Industry affiliation; Skill premium; Value-chain activities

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