is not available in the underlying national account data used in GTAP. The next best thing was to use sectoral employment data that matches the GTAP data.

The United Nations Industrial Development Organization (UNIDO) provides such employment data at a relatively high level of disaggregation (4-digit ISIC sector) for a large number of countries and years but the data are only available for the industrial sector. Therefore we resort to the ILO statistics, which compile sectoral employment data for various countries and years. However the country and sectoral coverage is considerably more limited than that of GTAP, which reduces the number of countries and sectors for which the jobs content of exports is available. In particular, the prevailing aggregation of sectors in the ILO statistics consists of 11 sectors (see Table A3 in Appendix 1), which we match with the original GTAP sectors.

We replace the diagonal matrix of the compensation of employees in total output �<sup>�</sup> with the equivalent matrix of employment in output �<sup>�</sup> , which is obtained by the number of employees per total output Z. By replacing �<sup>�</sup> with �<sup>�</sup> in equation (3) we can compute the J matrix ���<sup>�</sup> � and then derive the counterparts of the _G_ and _H_ matrixes in terms of jobs contained in output and exports. Appendix 3 lists the steps needed to reconstruct the LACEX database from GTAP and Appendix 4 for the list of variables in the labor value added and jobs content of exports data sets.

One drawback of this approach is that the employment data are not always consistent with the compensation of employees data used to compute the labor content of exports. The original source of the former is typically national labor force surveys. These are often not easily reconcilable with national account data, which are the source of compensation of employees data. This discrepancy is particularly acute at the sectoral level also due to the different sectoral classifications of the two sources of data, ultimately making the labor and jobs content of exports data not strictly comparable at the sectoral level.<sup>9</sup> However, this method allows both the labor and jobs content of exports to be consistent with the national account and labor force survey data, respectively.

# **3. Global patterns of wages in exports**

## **3.1. Global patterns of labor value added across income groups and regions**

We start by discussing global patterns of total wages linked to exports, followed by some cross-country comparisons.<sup>10</sup> We examine the labor content of exports both in terms of their direct and indirect value added.<sup>11</sup> The labor content of exports is measured as nominal values in US$ (denoted LVAX), and as a share of gross exports (LVAX share), which is a measure of the labor intensity of a country’s or sector’s exports. We also use our measures of the labor content of domestic output (denoted LVAD).

**Error! Reference source not found.** shows that the global share of total labor value added in the value of gross exports (LVAX share) has been in constant decline since 1995. In 1995, the total (direct plus indirect) value of wages was $46 for each $100 of gross exports and in 2011 the value was $40.<sup>12</sup> The direct value

> 9 To check this we compute the sectoral average wage for laborers by dividing the total compensation of employees by the total number of employees. For several country-sector pairs this computation generates unreasonably high or low average wage values.

> 10 We do not provide global trends for jobs given the limited availability of the data for several countries.

> 11 Where indirect value added can take into account either the indirect contribution via backward or forward linkages to exports, we focus on the backward linkages in this report unless otherwise noted. Total value added accounts for both the direct and indirect value added. At the country level, the indirect value added is the same when considering either the forward or backward linkages.

> 12 According to the TiVA Database, the trade-weighted average share of foreign value added in gross exports across all countries in the world in 2011 is 25%. Combined with our estimates, this suggests the domestic capital value added share of gross exports is 35%.

8