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Tradable Services: Understanding the Scope and Impact of Services Outsourcing


  • J. Bradford Jensen

    () (Peterson Institute for International Economics)

  • Lori G. Kletzer

    () (University of California, Santa Cruz)


We develop a new empirical approach to identify tradable service activities. Contrary to conventional views of service activities as nontradable, we find a significant number of service industries and occupations that appear tradable and substantial employment in these tradable activities. Workers employed in tradable service activities differ from those employed in tradable manufacturing and nontradable services. Workers in tradable service activities have higher skill levels and are paid higher wages than manufacturing workers or workers in nontradable service activities. In general, we find little evidence that tradable service activities have lower employment growth than other service activities. However, evidence suggests lower employment growth at the lowest end of the skill distribution. There is also evidence of higher worker displacement rates in tradable services. Workers displaced from tradable service activities are different from displaced manufacturing workers: Displaced tradable service workers have higher skills and higher predisplacement earnings than displaced manufacturing workers.

Suggested Citation

  • J. Bradford Jensen & Lori G. Kletzer, 2005. "Tradable Services: Understanding the Scope and Impact of Services Outsourcing," Working Paper Series WP05-9, Peterson Institute for International Economics.
  • Handle: RePEc:iie:wpaper:wp05-9

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    References listed on IDEAS

    1. Gilles Duranton & Henry G. Overman, 2005. "Testing for Localization Using Micro-Geographic Data," Review of Economic Studies, Oxford University Press, vol. 72(4), pages 1077-1106.
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    More about this item


    services; offshoring; trade; labor; information technology; jobs;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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