This paper constructed a simple model to illustrate the global supply chain profit sharing and industrial upgrading mechanism, from which it was found that the average profitability distribution in the different supply chain stages was determined by two main factors: (1) the average product of the labor in the firms at each production stage; and (2) the ratio of the output elasticity of capital to the output elasticity of labor in each stage. This paper also proposed a new industrial upgrading mechanism, the ‘inter-supply chain upgrading’, for supply chain firms. Rises in production complexity and increased factor intensity in each production stage were found to be the two essential conditions for the inter-supply chain upgrading. The empirical study results were found to be broadly consistent with the proposed theories.
Skills and knowledge are crucial for finding good jobs and earning high incomes. This explains why, in spite of the increasing costs, most of us consider education as a valuable investment. However, new research at the Growth Lab - recently published in Science Advances - shows that just having valuable skills oneself is insufficient. What is as, or possibly even more, important as one’s own education is how our skills relate to the skills of the people we work with. Moreover, coworker complementarities help answer a number of old questions: Why can workers with the same education earn drastically different wages? Why do large cities pay such high wages? And why do workers earn higher wages in large establishments than in small establishments, even if they have similar skills?