Global value chains and employment: Do skill and development level matter?

This study examines the impact of GVCs on employment across 44 countries and 148 industries from 1995 to 2022. Without considering skill levels, we find that backward GVC participation positively impacts employment in agriculture but reduces it in manufacturing. In contrast, both forward and backward GVC participation drive employment in the services sector. We also consider skill levels in explaining the effects of GVCs on employment across industries. In agriculture, higher backward GVC participation generates employment across all skill levels, while forward participation increases employment only for low- and high-skilled workers. In manufacturing, higher backward participation is associated with lower employment across all skill levels. Meanwhile, in services, both forward and backward GVC participation stimulate employment for medium- and high-skilled workers. Higher forward participation reduces low-skilled employment. To capture cross-country heterogeneity, we also distinguish between developing and developed countries. The empirical results reveal substantial variation across development and skill levels. Specifically, backward GVC participation is more harmful to manufacturing employment in developing countries, while forward GVC participation supports services employment more significantly in developed countries.