Conference Paper
GVC and Labor Market Outcomes: Evidence from MENA
No.
ERF30_12
Publisher
ERF
Date
March, 2024
This paper studies the effect of global value chains (GVC) participation on wages in Egypt, Jordan, and Tunisia. Although theoretical predictions suggest an upward GVC effect on wages, this benefit is heterogeneous in accordance with GVC position (high vs. low value-added) signaled by sectoral technology intensity as well as labor divide (skilled vs. unskilled). By merging World Bank Enterprise Surveys (WBES) and Labor Market Panel Surveys (LMPs) data, this paper contributes to the literature as follows. First, it differentiates between GVC participation margins (extensive vs. intensive) and capture the effect of each on wages and wage premium. Second, it explores the GVC mediating effects of technology and skill levels to the end of capturing conventional biases against developing countries endowed with unskilled labor. This study shows that the homogenously upward GVC effect on wages and wage premium is strengthened with skill requirement. Results remain consistent when using Heckman correction analysis to control for selection bias.
Authors
Yasmine Eissa
Assistant Professor of Economics, Misr International University