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Service Trade, Regional Specialization, and Welfare

Author

Listed:
  • Yuancheng Han
  • Jorge Miranda-Pinto
  • Satoshi Tanaka

Abstract

How much does trade in services affect regional production specialization and welfare? Using unique Canadian trade data, we document that the size of inter-provincial service trade is comparable to that of good trade, and that net exports of services are highly correlated with the value-added share of tradable services across provinces. With a spatial model featuring domestic and international trade, we quantify the effects of service trade. Our results highlight that domestic service trade significantly promotes regional specialization, with heterogeneous welfare gains that reduce regional disparities. Conversely, international service trade generates more uniform welfare gains across provinces.

Suggested Citation

  • Yuancheng Han & Jorge Miranda-Pinto & Satoshi Tanaka, 2023. "Service Trade, Regional Specialization, and Welfare," CAMA Working Papers 2023-41, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2023-41
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    File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2023-08/41_2023_han_miranda-pinto_tanaka.pdf
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    More about this item

    Keywords

    service trade; domestic trade; regional specialization; regional disparities; welfare; structural transformation;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • F10 - International Economics - - Trade - - - General
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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