Integration in Global Value Chains and Employment in Europe

Abstract

This chapter aims at revisiting the empirical evidence on the recent trends of countries’ integration in global value chains in Europe. It investigates two potential sources of unbalances that these processes might relate to: (i) the sectoral specialization of the patterns of international fragmentation, whether high technology manufacturing or knowledge intensive services (KIBS); (ii) the occupational categories that have benefited or been penalized by these trends. A rich empirical mapping of these trends in the European countries is provided, based on OECD ICIO and EU ISCO data. The results on the overall and sectoral-specific trends of integration in GVCs and the associated changes in the shares of managers and manual workers show a dual-speed and qualitatively different integration patterns in Europe, with Eastern European (EE) countries rapidly integrating in high tech manufacturing, and the core of western countries strengthening their mutual integration in the KIBS area. Despite the relatively “good quality” integration of EE countries, the evidence does not seem to reveal a mirroring upgrading of employment structures. While this empirical contribution does not attempt to identify causal relationships, the picture provided in the chapter shows that, overall, integration in GVC seems to reproduce and perhaps exacerbate the initial asymmetries in the sectoral and employment structure, with manual workers occupation reducing overall and knowledge intensive occupations concentrating in western Europe.

Keywords: Global value chains, offshoring, KIBS, High-tech manufacturing, employment, skills

JEL Classification: F66, J24