of gross output (LVA share) has remained fairly constant since 1995, for both the direct and total LVA share. This finding suggests that the determinants of labor shares in exports may be divorced somewhat from those in output, potentially due to different changes in the composition of exports and output.

**Figure 2. Direct and total LVA share**

<!-- Start of picture text --> 0.6<br>0.5<br>0.4<br>0.3<br>0.2<br>0.1<br>total LVA share direct LVA share<br>0<br>1995 1997 2001 2004 2007 2011<br><!-- End of picture text --> Note: Based on export-weighted data for 31 countries that are present in the database every year since 1995, including: China, India, Sri Lanka, Vietnam, Argentina, Brazil, Chile, Colombia, Indonesia, the Republic of Korea, Morocco, Mexico, Malaysia, Philippines, Thailand, Turkey, Uruguay, República Bolivariana de Venezuela, Australia, Canada, Denmark, Finland, Germany, Hong Kong SAR, China, Japan, New Zealand, Singapore, Sweden, Taiwan, China, UK and USA.

In Figure 3 and Figure 4 we split the world into three income groups to understand the drivers of these aggregate trends.<sup>13</sup> In order to gauge the evolution of our indicators over time we draw trend lines using data only for the 31 countries that are present in the database over the whole period 1995-2011, and group countries according to their 1995 income classification. The group of high-income countries is the only group that experienced a considerable and steady decline in both the direct and total LVAX share, and drives the observed declining trend at the global level. In the middle-income group both the direct and the total LVAX share remained rather stable. In the low-income group the total LVAX share increased, notably between 2007 and 2011, despite the direct LVAX share remaining stable. This suggests the indirect linkages have become relatively more important for exports in the low-income group, a result in line with the increasing importance of backward linkages in exports from China (Kee and Tang, forthcoming), the largest country in that group.

For a more accurate comparison of how the direct and total labor value added in exports varies across level of economic development, we use data for the full sample of countries in the database. Because country coverage has increased over the years, to avoid making erroneous comparisons over time we use data only for 2011 represented as dots, and group countries according to their 2011 income classification. In highincome countries the direct labor value added accounts for the greatest share of gross export values (20%). The low-income group has a similar share (18%) while it is the lowest in the middle-income group (13%). This pattern is broadly consistent with the relative export specialization of high-income countries in skilled labor intensive services and of low-income countries in unskilled labor intensive agriculture. On the other

> 13 Income group is defined according to the World Bank country group classification, found at https://datahelpdesk.worldbank.org/knowledgebase/articles/378834-how-does-the-world-bank-classify-countries. A country is low income in 1995 if its 1993 GNI per capita, atlas method (current US$) is $765 or less, middle income if greater than $765 and $9,385 or less, and high income if greater than $9,385. A country is low income in 2011 if its 2009 GNI per capita, atlas method (current US$) is $1,005 or less, middle income if greater than $1,005 and $12,275 or less, and high income if greater than $12,275.

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