Supply-chain trade and labor market outcomes: The case of the 2004 European Union enlargement

The structure of international trade is increasingly characterized by fragmentation of production processes and trade policy. Yet, how trade policy affects supply-chain trade is largely unexplored territory. This paper shows how the accession of 10 Central and Eastern European Countries (CEECs) to the European Union affected European supply-chain trade. We find that accession primarily fostered CEECs’ integration in global value chains of other entrants. Smaller integration benefits stem for East–West trade in services for lower-skill activities. These increases in value-added exports translate into sizeable job creation.