Does the Global Value Chain Increase Income Polarization?——A Study Based on Income Shares of High-Income and Low-Income Populations
Many countries are facing the same problem that the global value chain affects the pattern of income distribu-tion.The purpose of this paper is to study the heterogeneous effect of the global value chain on income inequality.By combining theoretical analysis and empirical evidence,this paper studies the effect of the global value chain on income inequality across countries with panel data from 1990 to 2018.It is found that higher GVC participation exacerbates income in-equality,while higher GVC position is more conductive to narrowing income inequality.Mechanism test reveals that higher GVC participation worsens labor-capital relations and leads to lower compensation for workers,which in turn exacerbates in-come inequality.Higher GVC position helps increase the bargaining power of workers and reduce income inequality.The sub-sample regression reveals that GVC has a significant effect on the income distribution of developing countries,including China.Based on the above findings,this paper puts forward the following policy recommendations.Firstly,China should imple-ment the strategy of high-quality development as well as the domestic and international double-cycle development,and con-tinue to stabilize its participation in GVC,striving to move upstream in GVC so as to avoid the negative effect of participation in GVC on China's income distribution.Secondly,to promote a high level of opening up to the outside world,China should con-tinue to learn from the experience of developed countries through opening up,improve the ability of labor protection and collec-tive bargaining,build a well-functioning legal system to regulate labor-capital conflicts and commit itself to creating a first-rate business environment that is market oriented,rule of law based,and internationalized.Thirdly,against the backdrop of the demographic dividend gradually disappearing,China should cultivate talents suitable for the open economy,vigorously develop high-technology-intensive manufacturing industries,promote technological progress,and expand the proportion of high-skilled talents in the skilled labor force,thus pushing forward the transformation and upgrading of China's manufacturing industry.
Global Value ChainIncome InequalityIncome ShareLabor-Capital RelationshipTechnological Prog-ress