The Employment Effects of Technology, Trade, and Consumption in Global Value Chains: Evidence for Developing Asia

Abstract

Global value chains (GVCs) have been a vehicle for job creation in developing Asia, but technology can also displace workers through automation or reshoring of production. We use an input-output approach to examine how employment responded to consumption, trade, and technological progress in 16 economies that accounted for about 95% of employment in developing Asia from 2008 to 2018. Structural decomposition analysis based on the Asian Development Bank's Multiregional Input-Output database combined with harmonized cross-economy occupation by industry data indicates that, other things being equal, technological change within GVCs and task relocation relate to a decline of routine manual, relative to nonroutine cognitive, occupations in manufacturing. We find no evidence of major shifts in labor demand due to reshoring. Domestic consumption expenditure of goods and services is associated with an increase in labor demand that is large enough to offset efficiency changes in GVCs.