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Service Imports, Workforce Composition, and Firm Performance: Evidence from Finnish Microdata

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  • Andrea Ariu
  • Katariina Nilsson Hakkala
  • J. Bradford Jensen
  • Saara Tamminen

Abstract

This paper uses unique Finnish firm-level micro data on service imports, work- force composition, and firm characteristics to examine changes in employment composition and performance of Finnish service importers during a period of a significant increase in services imports (2002-2012). We use world service export supply shocks, which we allocate to firms based on their highly specialized service input structure, as an instrument to identify the impact of service offshoring. We find that firms that increase imports of service inputs reduce employment of low-skill service workers, increase employment of (high-skilled) managers and improve their performance in terms of sales (turnover), assets, service exports, and firm survival. The employment composition and performance responses to service imports differ across firms in the manufacturing sector and those in the service sector.

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  • Andrea Ariu & Katariina Nilsson Hakkala & J. Bradford Jensen & Saara Tamminen, 2019. "Service Imports, Workforce Composition, and Firm Performance: Evidence from Finnish Microdata," NBER Working Papers 26355, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26355
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    2. Sleuwaegen, Leo & Smith, Peter M., 2021. "Service characteristics and the choice between exports and FDI: Evidence from Belgian firms," International Economics, Elsevier, vol. 168(C), pages 115-131.
    3. Omar Bamieh & Francesco Bripi & Matteo Fiorini, 2022. "Services trade and labor market outcomes: Evidence from Italian firms," Review of International Economics, Wiley Blackwell, vol. 30(3), pages 673-701, August.
    4. Magli, Martina, 2022. "The Spillover Effect of Services Offshoring on Local Labour Markets," Rationality and Competition Discussion Paper Series 351, CRC TRR 190 Rationality and Competition.
    5. Sampriti Das & Amiya Sarma, 2021. "Growth Behaviour of India’s Export of Services, 1975–2018," Foreign Trade Review, , vol. 56(3), pages 301-321, August.
    6. Martina Magli, 2022. "The spillover effect of services offshoring on local labour markets," CEP Discussion Papers dp1892, Centre for Economic Performance, LSE.
    7. Magli, Martina, 2022. "The spillover effect of services offshoring on local labour markets," LSE Research Online Documents on Economics 118048, London School of Economics and Political Science, LSE Library.
    8. Martina Magli, 2020. "The Direct and Indirect Effect of Services Offshoring on Local Labour Market Outcomes," CESifo Working Paper Series 8413, CESifo.
    9. Jiwon Park, 2024. "Outsource to India: The impact of service outsourcing to India on the labor market in the United States," Bulletin of Economic Research, Wiley Blackwell, vol. 76(1), pages 203-222, January.

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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L80 - Industrial Organization - - Industry Studies: Services - - - General

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