Korea Trade Review (무역학회지)

Korea Trade Research Association (한국무역학회)
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Participation in GVCs and Income Inequality

글로벌 가치사슬에서 전방참여와 후방참여가 소득불평등에 미치는 영향

  • Li, Jia-En (Department of International Business and Trade, Kyung Hee University) ;
  • Choi, Young-Jun (Department of International Business and Trade, Kyung Hee University)
  • Received : 2019.03.07
  • Accepted : 2019.04.21
  • Published : 2019.04.30
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Abstract

This study analyzes the effects of participation in the global production network on the income inequality using panel data from 2005 to 2016 for 63 countries. In this study were used fixed effects model with autocorrelation, random effect model with autocorrelation and the GLS method. Results are as follows: First, the economic development level supports the Kuznets hypothesis. And then, the forward participation in global value chains increased income inequality, and the backward participation decreased income inequality. In order to derive more detailed estimation results, we analyzed OECD countries and non-OECD countries. First, OECD countries featured decreased, but increased beyond a certain level as a U-shaped curve, that did not support the Kuznets hypothesis. In contrast, non-OECD countries followed the Kuznets U-curve. Second, participation in the global production network showed that both OECD and non-OECD countries featured increased income inequality. In contrast, backward participation appears to mitigate income inequality both in OECD and non-OECD countries. Finally, the ratio of labor and capital is significant in mitigating income inequality in non-OECD countries in which they feature backward participation in production networks. This can be interpreted as developing economies participate in the global production network due to increased capital accumulation and increased the labor productivity.

Keywords

Acknowledgement

This work was supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea (NRF-2016S1A2A3913925).

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