mainly laborers, while the opposite is true for extractive sectors, which do not have much impact on wages. There has also been an attempt to estimate the sectoral labor effects of the trade contraction following the 2008 global crisis using social accounting matrices in a Leontief multiplier model, specifically in South Africa and India (Kucera et al. 2012). The industry-level changes in exports on industry-level changes in employment was mediated by its indirect and income-induced effects as well as differences in laborintensity of production across sectors. Los et al. (2015) also use input-output analysis to show that the composition of export growth mattered for job growth and ultimately structural transformation in China.

The remainder of this paper proceeds as follows. Section 2 briefly describes the World Bank database on the labor content of exports and the methodology to measure the wages and jobs content. Section 3 presents the findings of labor and jobs content of aggregate production and exports in South Africa relative to peer countries. To control for compositional effects, Section 4 presents these results at the sectoral level first in South Africa and second relative to peer countries. Section 5 narrows the focus even further to GVCoriented sectors to understand how changes in labor content relate to changes in GVC-participation in South Africa. Section 6 concludes with policy implications.

# **2. Data**

The main data we use in the analysis is the newly developed World Bank Labor Content of Exports (LACEX) database. The database encompasses information on the contribution of labor to a given country’s domestic production and exports, measured as employees’ compensation (wages) or the number of jobs. The LACEX database has been computed by Calì et al. (2016) on the basis of a panel of global input-output tables and other aggregate data spanning intermittent years from 1995 to 2011 from GTAP and employment data from ILO.<sup>6</sup> The input-output tables in the GTAP data set allow one to exploit a form of social accounting data—a variation on the social accounting matrix (SAM) where incomes are shown in the rows of the SAM and expenditures are shown in the columns (see Hertel (2013) and McDougal (2001)). The structure of the underlying social accounting data provides a comprehensive and consistent record of national income accounting relationships between different sectors, including intermediate and final demand linkages. These are used to construct country-specific measures of the contribution of labor to the value added contained in a given country’s domestic production and exports.<sup>7</sup> The resulting data set covers 24 sectors (6 services sectors, 3 primary sectors and 15 manufacturing sectors), over 100 countries, and intermittent years between 1995 and 2011. As such, the data allow to examine the labor content of South Africa’s exports at the aggregate and sectoral levels, including exports associated to trade traditionally governed within GVCs.

Specifically, in order to obtain these labor value added measures, two intermediate multiplier matrixes need to be calculated from the social accounting and other aggregate data. The first is the Leontief inverse matrix, which measures the inputs contained in a unit of final output, and includes both direct and indirect inputs

> 6 GTAP represents a massive combined effort of international institutions and universities. Over time, the data set has grown to include more countries and more sectors. The latest version, GTAP 9, has data on 129 countries/regions and 57 sectors (Narayanan 2012). To maintain backward compatibility, Calì et al. (2016) start with the 1997 structure of regions and sectors, and carry this forward in aggregation of more recent iterations of the data set. The GTAP website also provides extensive documentation on the underlying data structure, its sources, and the GTAP model structure for each release (www.gtap.org).

> 7 In the remainder of the paper we refer interchangeably to total labor value added content, wages and compensation to employees.

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