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Begin New Search Topic Global Value Chains Political Geography Thailand

1. 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

2. The Impact of Global Value Chain Integration on Wages: Evidence from Matched Worker-Industry Data in Thailand

Author:
Sasiwimon W. Paweenawat
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Using a two-stage estimation of matched worker-industry data from 2000 to 2011, this study investigates the impact of global value chain (GVC) integration on wages and the skill premium in 32 industries in Thailand, a country with recent heavy involvement in GVCs. This study employs foreign value added in both final and intermediate goods exports as a proxy for the degree of industry integration in GVCs and applies a panel fixed effects estimation on constructed panel data to investigate its relationship with wages. The main finding indicates that a higher level of industry integration with GVCs leads to higher wages and a higher skill premium, confirming the positive effect of GVC involvement on wages and the complementary effect of high demand for skilled workers in GVC-oriented industries in Thailand. Workers in industries with positions close to the end of the value chain (downstream position) will earn a higher wage than those working in the upstream position. These results have significant policy implications. The Thai government should not only attempt to increase industry involvement in GVCs overall, but also aim to lift industries to higher positions in the GVC to gain the most benefits for Thai workers and the country overall.
Topic:
Labor Issues, Inequality, Wage Subsidies, and Global Value Chains
Political Geography:
Asia and Thailand