Global Value Chains, Trade Shocks and Jobs: An Application to Brexit

45 Pages Posted: 21 Feb 2019

See all articles by Hylke Vandenbussche

Hylke Vandenbussche

Catholic University of Leuven (KUL), CEPR

William Connell Garcia

KU Leuven - Faculty of Business and Economics (FEB)

Wouter Simons

KU Leuven - Faculty of Business and Economics (FEB)

Multiple version iconThere are 3 versions of this paper

Date Written: 2019

Abstract

We develop a network trade model with country-sector level input-output linkages. It includes (1) domestic and global value chain linkages between all country-sectors, (2) direct as well as indirect shipments (via other sectors and countries) to a final destination, (3) value added rather than gross trade flows. The model is solved analytically and we use the sectoral World Input Output Database (WIOD) to predict the impact of Brexit for every individual EU country by aggregating up the country-sector effects. In contrast to other studies, we find EU-27 job losses to be substantially higher than hitherto believed as a result of the closely integrated EU network structure. Upstream country-sectors stand to lose more from Brexit due to their network centrality in Europe.

JEL Classification: C530, D570, F170, F140

Suggested Citation

Vandenbussche, Hylke and Connell Garcia, William and Simons, Wouter, Global Value Chains, Trade Shocks and Jobs: An Application to Brexit (2019). CESifo Working Paper No. 7473. Available at SSRN: https://ssrn.com/abstract=3338827

Hylke Vandenbussche (Contact Author)

Catholic University of Leuven (KUL), CEPR ( email )

Faculty of Economics
Naamsestraat 69
B-3000 Leuven, 3000
Belgium
+32 16 326 920 (Phone)
+32 16 326 732 (Fax)

HOME PAGE: https://www.sites.google.com/site/vandenbusschehylke/home-1

William Connell Garcia

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Wouter Simons

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

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