Is Labour the Fall Guy of a Financial-led Globalisation? a Cross-country Inquiry on Globalisation, Financialisation and Employment at the Industry Level

This paper looks at the relationship between globalisation, employment and financialisation at the industry level by providing an analytical framework describing three modes of insertion into global production (fragmentation of production, global competition and domestic positioning) and four industry dynamics (decline, predation, rent-seeking and expansion). This analytical framework is then tested econometrically in a panel of 38 countries and 30 industries over the period 1995-2009. While regressions pooling all industries appear inconclusive, there is some evidence of contrasted outcomes across industries when they are grouped into the categories proposed in the theoretical framework. In some sectors, the productivity gains from offshoring seem to have benefited employment and the expansion of production through investment while in others they have led to rents and a higher share of the gross operating surplus going to shareholders and financial institutions (i.e. financialisation). The debate on offshoring and trade would benefit from a better understanding of the mechanisms that explain these differences among industries.