Automation, global value chains and functional specialization

Lionel Fontagné (1, 2, 3) , Ariell Reshef (2, 3, 1) , Gianluca Santoni (3) , Giulio Vannelli (4)

1 CES - Centre d'économie de la Sorbonne
2 PSE - Paris School of Economics
3 CEPII - Centre d'Etudes Prospectives et d'Informations Internationales
4 LEDa - Laboratoire d'Economie de Dauphine

We study how technology adoption and changes in global value chain (GVC) integration jointly affect labor shares and business function specialization in a sample of 14 manufacturing industries in 14 European countries in 1999–2011. Increases in upstream, forward GVC integration directly reduce labor shares, mostly through reductions in fabrication, but also via other business functions. We do not find any direct effects of robot adoption; robotization affects labor only indirectly, by increasing upstream, forward GVC integration. In this sense robotization is “upstream-biased”. Rapid robotization in China shaped robotization in Europe and, therefore, relative demand for labor there.

Keywords: labor share; functional specialization; global value chains; upstreamness; technological change; automation; robots

Domains: Economics and Finance

Lionel Fontagné, Ariell Reshef, Gianluca Santoni, Giulio Vannelli. Automation, global value chains and functional specialization. Review of International Economics, inPress, ⟨10.1111/roie.12711⟩. ⟨halshs-04346960⟩