Does Integration into Global Value Chains Promote Wage Employment in Sub-Saharan Africa? Evidence from a Macroeconomic Analysis Accounting for Institutional Quality
Keywords:
Global value chains, Paid employment, Quality of institutions, Sub-Saharan AfricaAbstract
This article examines how participation in global value chains (GVCs) affects the supply of paid employment in sub-Saharan Africa (SSA) and empirically tests the moderating role of institutional quality. Using a panel of 38 countries from 1996 to 2018 and robust econometric methods, including high-dimensional fixed-effects regression (HDFE) and instrumental variable (IV) estimators, the results show a positive and significant effect of GVCs on paid employment. The analysis reveals that this effect is nearly twice as large for women. Above all, the study establishes that institutional quality, particularly control of corruption, government efficiency, and regulatory quality, significantly amplifies this positive relationship. Sensitivity analyses confirm the robustness of the results and highlight the risks associated with dependence on natural resources, as well as the central role of the service sector in generating formal jobs. The policy implications underscore the need for proactive trade policies coupled with deep institutional reforms to maximize the benefits in terms of decent employment.
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