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Globalization and unemployment in the EU: new insights on the role of global value chains and workforce composition
1 : University of Valencia
The European Union's participation in Global Value Chains (GVCs) is significantly higher than in North America and Asia and has steadily increased with the creation of the Single Market and the launching of the euro. We provide empirical evidence on the consequences of GVC participation on aggregate unemployment. Using data for EU countries and impulse response functions derived from local projections, we show that higher participation reduces the unemployment rate in less advanced EU economies while it increases it in core countries. Our results also show that unemployment is particularly sensitive to GVCs when the labor cost is low.
