Wage differences according to workers' origin: The role of working more upstream in GVCs

Abstract

This article examines the impact of a firm's position in Global Value Chains (GVCs) on wages according to workers' origin. Based on a unique linked employer–employee dataset regarding the Belgian manufacturing industry covering the 2002–2010 timespan, our estimates show that firms that are more upstream in the value chain pay on average significantly higher wages. However, the wage premium associated with upstreamness is also found to be unequally shared among workers. Unconditional quantile regressions and decomposition methods suggest that high-wage workers born in developed countries benefit the most from being employed higher up the value chain, while workers born in developing countries appear to be unfairly rewarded.