NO : WP-2025-005
AUTHOR : Deepali Gupta and C. Veeramani
TITLE : Effects of Backward GVC Participation on Labor Market: Micro-Level Evidence from India
ABSTRACT :
Several studies show that countries increasingly participate in Global Value Chains (GVC) by specialising in intermediate goods. Theoretical fragmentation models suggest that backward GVC participation has a double advantage for a low-skilled, labour abundant country like India. It increases employment, and it reduces wage inequality. This paper assesses the impact of backward GVC participation on employment, wages, and labour productivity of workers engaged in Indian organised manufacturing indus tries. We use plant-level data provided by the Annual Survey of Industries (ASI) for 2008-09 till 2019-20. We find that GVC plants employ more workers and pay higher wages but find no significant differences in labour productivity. The share of female and contractual workers is not significantly different from non-GVC plants, but the share of production workers is slightly higher in GVC plants. We also find a lower wage gap between male and female workers; and contractual and non-contractual workers but a higher wage gap between production and non-production workers for GVC plants.
Keywords: Global value chains, Backward GVC participation, Employment, Wage Inequality, India
JEL Code: F14, F16, F66, J24, J31
Weblink: http://www.igidr.ac.in/pdf/publication/WP-2025-005.pdf
