Working Papers

Inter-Industry Spillovers in Labor Productivity and Global Value Chain Impacts: Evidence from Turkey

No.

1430

Publisher

ERF

Date

December, 2020

Topic

F6. Economic Impacts of Globalization

F1. Trade

J2. Demand and Supply of Labor

Based on the world input-output database 2016 (WIOD), this study examines the impact of the global value chain (GVCs), via the backward and forward linkages, on labor productivity. Using a spatial econometric approach, it pays particular attention to the spillover effects in productivity across industries through input-output relations. It is shown that a stochastic shock in productivity in one sector significantly transcends and boosts productivity in other sectors through input-output dependencies. Moreover, productivity significantly declines with backward linkages within their sectors. However, productivity increases with forward linkages both within own sectors and across sectors through input-output relations. A sectoral analysis of the GVCs' effects on productivity reveals that manufacturing backward linkages is negatively associated with productivity not only within own sectors but also across manufacturing sectors, whereas productivity in service sectors rises with forward linkages within and across service sectors. This study shows that ignoring the spillovers effects across sectors causes the estimates to be biased.
Inter-Industry Spillovers in Labor Productivity and Global Value Chain Impacts: Evidence from Turkey

Research Fellows

Mohamedou Nasser Dine

Head and Project Manager, UNDP Mauritania