Unpacking the Polarizing Effects of Global Production Networks: Evidence from EU Regions

Presenter

Vieri Calogero (University of Milano-Bicocca)

Coauthors

Simona Comi, Mara Grasseni and Laura Resmin

Abstract

This paper investigates the relationship between regional participation in Global Production Networks (GPNs) and labour market polarization across European regions. While existing literature has extensively examined the effects of technological change and trade on occupational structures, the territorial consequences of different modes of firm internationalization remain underexplored. We address this gap by constructing a novel panel dataset (2007–2022) that integrates regional employment data with firm-level information on multinational ownership structures from Orbis DataHub. We identify three main forms of GPN participation: the emergence of Global Ultimate Owners (GUOs), the expansion of foreign subsidiaries by domestic multinationals (SUBOUT), and the presence of foreign-owned firms (SUBIN). Using fixed effects and instrumental variable models, we find that all three forms of internationalization are significantly associated with higher levels of polarization, though outward FDI by local firms generates the strongest effects by displacing middle-skill occupations. Importantly, we show that national labour market institutions—such as employment protection legislation and collective bargaining centralization—can moderate these effects, in some cases reversing the direction of impact. Our findings suggest that policies supporting international integration should be accompanied by institutional and territorial strategies capable of addressing uneven impacts and fostering a more balanced distribution of their outcomes.