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11. Analysis of Global Value Chain Participation and the Labour Market in Thailand: A Micro-level Analysis

Author:
Upalat Korwatanasakul and Youngmin Baek
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study assesses the links between global value chain (GVC) participation and the labour market to examine the relatively unexplored employment-related distribution effects of GVC integration. Based on the Mincer wage model, we examine the relationship between GVC participation and worker productivity and wages at the individual level. Our main estimation method is a simple ordinary least squares estimation using pooled cross-sectional data from the Thai Labour Force Survey for the period 1995–2011. We also separately examine the effects of forward and backward GVC participation on wages and wage distributions. Our results show that GVC participation induces higher monthly wages for individuals and increases productivity in the labour market through either the forward linkage or backward linkage. We even find that GVC participation can help mitigate inequality. Our findings show that GVC participation promotes inclusive job creation and provides more job opportunities for rural, female, and low-skilled workers. Policies to support leveraging the existing strong industries through upgrading, smoothing labour movements while improving agricultural productivity, and preparing to move towards a services economy can help prepare Thailand, and other developing countries in general, to upgrade to higher value chains. Although GVC participation may be a catalyst for higher wages, greater labour productivity, and more inclusive job creation, its employment effects are complicated. An unbalanced policy framework might contribute to uneven income distributions and exclusive job creation as participating in GVCs through different linkages can benefit different stakeholders in varying ways. Therefore, a policy framework that balances the benefits among stakeholders in terms of wage distributions and job inclusion is ideal.
Topic:
Labor Issues, Work Culture, Global Value Chains, and Labor Market
Political Geography:
Asia and Thailand

12. The Value-Added Tax Reform and Labour Market Outcomes: Firm Level Evidence from China

Author:
Yuxiang Yang and Hongyong Zhang
Publication Date:
08-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The tax incentives designed to stimulate firm investment may have a large impact on labour market outcomes. Using a comprehensive data set containing more than 1 million Chinese manufacturing firms during the period 2000–2013 with a difference-in-difference approach, we examine the impact of the value-added tax reform in 2004–2008 on the firm-level labour market outcomes. We find that firms in eligible industries and regions (treated firms) enjoying lower costs of purchasing fixed assets under the reform tended to increase capital investment and reduce employment relative to firms that did not have tax incentives (the control firms). Compared with the control firms, the treated firms became more capital intensive and had an increase in average wage but a decline in labour income share. We also provide evidence that the substitutions of labour input by capital input is associated with increases in firm productivity and the share of skilled workers, but not imported capital goods.
Topic:
Labor Issues, Reform, Tax Systems, and Labor Market
Political Geography:
China and Asia

13. Inclusive growth: how to encourage persons with disabilities into the labour market

Author:
Gan Siew Wei, Vengadeshvaran Sarma, and Tang Yu Hoe
Publication Date:
03-2020
Content Type:
Policy Brief
Institution:
Asia Research Institute, University of Nottingham
Abstract:
Persons with disabilities (PWDs) are regularly discriminated against in the labour market and have little opportunity to participate in employment and entrepreneurship. In Southeast Asia, the lack of data masks the severity of their exclusion. This brief draws on an impact-evaluation of a multicountry corporate social responsibility project in the region. Policy makers should consider the collection of a centralised database and the implementation of new training and mentoring to support PWDs.
Topic:
Discrimination, Disability, Corporations, and Labor Market
Political Geography:
Asia

14. Foreign Direct Investment and Labour Market Dynamics in a Developing Country: Evidence from Indonesian Plant-Level Data

Author:
Toshiyuki Matsuura and Hisamitsu Saito
Publication Date:
02-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study examines the impact of inward foreign direct investment on the wages and employment of skilled and unskilled workers in Indonesian manufacturing plants. Entry of multinational enterprises affects local labour markets through spillovers as well as labour and product market competition. Our results show that spillovers increase the labour demand of local plants for unskilled workers, but increased wages due to severe labour market competition reduce the demand for skilled workers. We also find that product market competition causes resource reallocation from low- to high-productivity plants. Thus, attracting inward foreign direct investment effectively enhances aggregate productivity growth, but may retard the transition to skill-intensive production in Indonesian manufacturing.
Topic:
Development, Foreign Direct Investment, Manufacturing, and Labor Market
Political Geography:
Indonesia and Asia

15. Defined Contribution Funded Social Security and Labor Supply: Focus on Mexican Social Security Reform in 1997

Author:
Sungwoo Hong
Publication Date:
07-2020
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
Countries adopting a defined benefit pay-as-you-go (DB PAYG) regime have two options to solve the issue of financial unsustainability: (1) a parametric reform, which alters policies within DB PAYG regime, and (2) a structural reform, which changes the regime from DB PAYG to a defined contribution funded (DC) system. In this study, focusing on the structural reform of Mexico in 1997, I investigate whether structural social security reform affects labor supply. The findings suggest that the change in the social security regime increased both labor force participation and work hours per week. However, in the case of the elderly, the intensive margin effect on labor supply was not statistically significant.
Topic:
Reform, Tax Systems, Social Security, and Labor Market
Political Geography:
Asia, Korea, and Mexico

16. Determinants of Korean Outward Foreign Direct Investment: How Do Korean Firms Respond to the Labor Costs of Host Countries?

Author:
Hanbyul Ryu and Young Sik Jeong
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
Low cost of labor has been one of the major incentives that foreign firms invest in many developing countries. Yet, many developing countries including China and ASEAN have recently experienced a rapid increase in labor costs. Using the wage information provided by JETRO, this study examines how Korean FDI outflow is affected by the increase in labor costs of the manufacturing industry in host countries. The results indicate that the worker’s and engineer’s wages in Asian developing countries, who accumulated at least 3 and 5 years of work experience, have generally a negative impact on Korean FDI outflow. However, there exist positive relationships between the wages and FDI when the wages stay at very low levels. We do not find evidence that labor costs make a significant impact on Korean FDI outflow to European or Developed countries.
Topic:
Development, Foreign Direct Investment, and Labor Market
Political Geography:
China, Asia, and Korea

17. The value of air quality in Chinese cities: Evidence from labor and property market outcomes

Author:
Xuan Huang and Bruno Lanz
Publication Date:
11-2015
Content Type:
Working Paper
Institution:
Centre for International Environmental Studies, The Graduate Institute (IHEID)
Abstract:
Using a dual-market sorting model of workers’ location decisions, this paper studies the capitalization of air pollution in wages and property prices across Chinese cities. We exploit quasi-experimental variations in particulate matter (PM10) concentration induced by a policy subsidizing coal-based winter heating in northern China, specifying a regression discontinuity design based on cities’ location relative to the policy boundary. We estimate that the elasticity of wages and house prices with respect to PM10 concentration is 0.41 and -0.71 respectively. Our results are robust to the use of an alternative source of exogenous variation in PM10 concentration (sandstorms), supporting the view that the local effect we measure provides policy-relevant information on the value of air quality improvements in China.
Topic:
Housing, Labor Market, Air Pollution, and Public Goods
Political Geography:
China and Asia

18. The ASEAN Single Aviation Market: Liberalizing the Airline Industry

Author:
Alan Knee-Jin Tan
Publication Date:
06-2014
Content Type:
Policy Brief
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This Policy Brief presents an overview of the barriers facing air transport liberalization in ASEAN. It lays out the policies that governments should undertake to overcome these barriers, particularly in light of rapid changes in the aviation industry. It also assesses the incomplete or unfinished nature of the ASEAN Single Aviation Market (ASAM) that necessitates further liberalizing steps beyond 2015. In particular, more meaningful market access and ownership/control relaxations must be pursued to deal with the increasing competition from airlines outside the region. A united external policy is also required to enhance ASEAN's negotiating position vis-�-vis other countries and blocs.
Topic:
Business, Industry, Labor Market, and Air Travel
Political Geography:
Asia and Southeast Asia

19. Addressing Labour Market Duality in Korea

Author:
David Grubb and Jae-Kap Lee
Publication Date:
10-2007
Content Type:
Working Paper
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
The Korean labor market has created many jobs over the past several decades, accompanying rapid economic growth. More recently, this favorable job performance has gone hand-in-hand with a rapid increase of temporary employment and other flexible or atypical work arrangements (usually called "non-regular" work in Korea.
Topic:
Labor Issues, Employment, Economic Growth, and Labor Market
Political Geography:
Asia and South Korea

20. Globalisation and Labour Markets Policy Issues Arising from the Emergence of China and India

Author:
David T. Coe
Publication Date:
11-2007
Content Type:
Working Paper
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
Globalisation is having important effects on labour markets in OECD countries. The global supply of labour has increased enormously with the emergence of China and India. At the same time technological advances have contributed to heightened income inequality and changed the nature of globalisation itself, most vividly demonstrated by the rapid growth of offshoring of business services that were previously nontradable. It is argued in this paper that these developments are best characterized as an intensification and broadening of the process of globalisation rather than a fundamental change in the nature of globalisation. They will, nevertheless, have long-lasting effects on OECD labour markets, increasing the urgency of implementing the labour market policies set out in the Restated OECD Job Strategy. The paper concludes that the most important implication of the emergence of China and India in the context of widespread perceptions of increasing economic inequality may be to reduce support for globalisation in OECD countries.
Topic:
Globalization, Labor Issues, Economic Inequality, and Labor Market
Political Geography:
China, India, and Asia