Unprecedented shocks to G-local value chains and the labor market - Finanziamento dell’Unione Europea – NextGenerationEU – missione 4, componente 2, investimento 1.1.

The coronavirus pandemic has represented an unprecedented shock for the magnitude and symmetry of its global impact upon the demand and the supply side of the economy. More recently, the conflict in Ukraine is reshaping international economic relations. Both shocks are testing the resilience of Global Value Chains (GVC) emerged since the 1980s as networks of firms specialized in production tasks across national borders following technological progress and decreasing trade barriers. Firms benefit from participation in GVCs by keeping costs under control and accessing global markets. Yet, a rise in GVCs has coincided with significant changes in labor markets and income inequality. The result is a tension between equity and efficiency. Additionally, recent shocks have shown hitherto underestimated risks and costs from an (over)-reliance on GVCs. Shocks affect firms in different nodes of the production network, both downstream and upstream, and may quickly lead to the collapse of some global and local components of the network. Magnification effects might also be at play depending on how firms are “chained” (interconnected) at the local, national, and international level, e.g., the extent to which countries, sectors, territories, and single firms are (over)-dependent on the output purchase or input provision of other countries, sectors, and firms in the production network. Both the coronavirus crisis and the recent conflict have highlighted how little is known about GVCs in terms of their determinants, their effects and the costs and benefits of specific GVC configurations on different categories of stakeholders. Are the current GVCs well diversified and can they reduce the impact of shocks? What are the consequences for both firms and workers of participating in different GVC types? Do we expect reshoring in the short or the long term? Are there strategic segments of GVCs that need special provisions and regulations? These questions have clearly important implications for policy makers and the broader social community. This proposal outlines how we plan to investigate GVCs from various angles, with a specific focus on their labor market impact. We aim at assembling a unique firm- and worker-level database to study the determinants and consequences of GVC configurations at a granular microeconomic level. Multidimensional indicators of competitiveness, safeness, and vulnerability of both network configurations and contractual environments will be produced. We also intend to understand the determinants of specific sourcing modes (outsourcing, offshoring, reshoring) at both the international and national level, and identify which territorial and firm characteristics are conducive to efficient and well-diversified supply chains. A novel employer-employee perspective, with a thorough analysis of the consequences for firms and workers of integration in different organizations of supply chains, is a distinctive feature of this proposal.