About the project
A defining feature of the global economy is the gradual fragmentation of production across firms and borders, a phenomenon that has been termed outsourcing or global value chains.
State-of-the-art empirical economic analysis on value chains has mostly been limited to the study of aggregate data because there is limited data on actual firm-to-firm linkages in the global economy. Even less is currently known about which products are typically outsourced, and which workers are affected. This project is changing that by bringing together four unique firm-to-firm datasets on local and global value chains that will push the research frontier forward in two main directions:
- Previous research has shown that economic integration encourages growth. Due to data limitations, however, we know little about the origins of growth, and to what extent the emergence of value chains can explain the growth response. New theory is needed, where firm-to-firm connections are endogenously formed in response to economic integration. The project will confront theory with data and directly test whether integration facilitates new buyer-supplier relationships and growth.
- Previous research has found that economic integration has large negative effects on wages for low-skill workers. But again, due to data limitations, it is unclear to what extent value chains are responsible for this. Simply put, the impact of outsourcing on wages will depend on which workers are displaced by outsourcing. Until now, researchers have not been able to observe which workers, along with their occupations and skills, that are employed in both the supplying and outsourcing firm. For the first time, this information will be available, allowing for a rich analysis of labor market effects for different skill groups.
GLOBALPROD will inform policymakers about how wages for different types of skills change in response to globalization, but also how economic integration can promote efficiency and competitiveness.
Funding is provided by the European Research Council (ERC) Starting Grant.
The project has a budget of 1,47 million Euro (13 million NOK) and lasts five years, from January 2017 to December 2021.