IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/26355.html
   My bibliography  Save this paper

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

Author

Listed:
  • 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.

Suggested Citation

  • 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
    Note: ITI
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w26355.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mary Amiti & Oleg Itskhoki & Jozef Konings, 2014. "Importers, Exporters, and Exchange Rate Disconnect," American Economic Review, American Economic Association, vol. 104(7), pages 1942-1978, July.
    2. David H. Autor & David Dorn & Gordon H. Hanson, 2016. "The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 205-240, October.
    3. Kristian Behrens & Gregory Corcos & Giordano Mion, 2013. "Trade Crisis? What Trade Crisis?," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 702-709, May.
    4. Nicholas Bloom & Mirko Draca & John Van Reenen, 2016. "Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity," Review of Economic Studies, Oxford University Press, vol. 83(1), pages 87-117.
    5. Magnus Lodefalk, 2013. "Servicification of manufacturing - evidence from Sweden," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 6(1), pages 87-113.
    6. Ariu, Andrea, 2016. "Crisis-proof services: Why trade in services did not suffer during the 2008–2009 collapse," Journal of International Economics, Elsevier, vol. 98(C), pages 138-149.
    7. Anders Akerman & Ingvil Gaarder & Magne Mogstad, 2015. "The Skill Complementarity of Broadband Internet," The Quarterly Journal of Economics, Oxford University Press, vol. 130(4), pages 1781-1824.
    8. Stefano Federico & Enrico Tosti, 2017. "Exporters and Importers of Services: Firm-Level Evidence on Italy," The World Economy, Wiley Blackwell, vol. 40(10), pages 2078-2096, October.
    9. David H. Autor & David Dorn & Gordon H. Hanson, 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," American Economic Review, American Economic Association, vol. 103(6), pages 2121-2168, October.
    10. Eppinger, Peter S., 2019. "Service offshoring and firm employment," Journal of International Economics, Elsevier, vol. 117(C), pages 209-228.
    11. Becker, Sascha O. & Ekholm, Karolina & Muendler, Marc-Andreas, 2013. "Offshoring and the onshore composition of tasks and skills," Journal of International Economics, Elsevier, vol. 90(1), pages 91-106.
    12. Holger Breinlich & Anson Soderbery & Greg C. Wright, 2018. "From Selling Goods to Selling Services: Firm Responses to Trade Liberalization," American Economic Journal: Economic Policy, American Economic Association, vol. 10(4), pages 79-108, November.
    13. Linda Andersson & Patrik Karpaty & Selen Savsin, 2016. "Firm-level effects of offshoring of materials and services on relative labor demand," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(2), pages 321-350, May.
    14. Catherine Fuss & Pierre Blanchard & Claude Mathieu, 2017. "Why do manufacturing firms produce services? Evidence for the servitization paradox in Belgium," Working Paper Research 330, National Bank of Belgium.
    15. Jonathan Eaton & Samuel Kortum & Francis Kramarz, 2011. "An Anatomy of International Trade: Evidence From French Firms," Econometrica, Econometric Society, vol. 79(5), pages 1453-1498, September.
    16. Wolfgang Dauth & Sebastian Findeisen & Jens Suedekum, 2014. "The Rise Of The East And The Far East: German Labor Markets And Trade Integration," Journal of the European Economic Association, European Economic Association, vol. 12(6), pages 1643-1675, December.
    17. Ariu, Andrea & Breinlich, Holger & Corcos, Gregory & Mion, Giordano, 2019. "The interconnections between services and goods trade at the firm-level," Journal of International Economics, Elsevier, vol. 116(C), pages 173-188.
    18. Mion, Giordano & Zhu, Linke, 2013. "Import competition from and offshoring to China: A curse or blessing for firms?," Journal of International Economics, Elsevier, vol. 89(1), pages 202-215.
    19. Matthieu Crozet & Emmanuel Milet, 2017. "Should everybody be in services? The effect of servitization on manufacturing firm performance," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(4), pages 820-841, December.
    20. Crinò, Rosario, 2010. "Employment effects of service offshoring: Evidence from matched firms," Economics Letters, Elsevier, vol. 107(2), pages 253-256, May.
    21. Rosario Crinò, 2012. "Service Offshoring and the Skill Composition of Labour Demand," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 74(1), pages 20-57, February.
    22. Andrea Ariu, 2016. "Services versus goods trade: a firm-level comparison," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 19-41, February.
    23. David Hummels & Rasmus J?rgensen & Jakob Munch & Chong Xiang, 2014. "The Wage Effects of Offshoring: Evidence from Danish Matched Worker-Firm Data," American Economic Review, American Economic Association, vol. 104(6), pages 1597-1629, June.
    24. Mary Amiti & Shang‐Jin Wei, 2009. "Service Offshoring and Productivity: Evidence from the US," The World Economy, Wiley Blackwell, vol. 32(2), pages 203-220, February.
    25. Ariu, Andrea & Mayneris, Florian & Parenti, Mathieu, 2020. "One way to the top: How services boost the demand for goods," Journal of International Economics, Elsevier, vol. 123(C).
    26. 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.
    27. Liu, Runjuan & Trefler, Daniel, 2019. "A sorted tale of globalization: White collar jobs and the rise of service offshoring," Journal of International Economics, Elsevier, vol. 118(C), pages 105-122.
    28. Rosario Crinò, 2010. "Service Offshoring and White-Collar Employment," Review of Economic Studies, Oxford University Press, vol. 77(2), pages 595-632.
    29. Ingo Geishecker & Holger Görg, 2013. "Services offshoring and wages: evidence from micro data," Oxford Economic Papers, Oxford University Press, vol. 65(1), pages 124-146, January.
    30. J. Bradford Jensen, 2011. "Global Trade in Services: Fear, Facts, and Offshoring," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 6017, January.
    31. Mary Amiti & Shang-Jin Wei, 2009. "Does Service Offshoring Lead to Job Losses? Evidence from the United States," NBER Chapters, in: International Trade in Services and Intangibles in the Era of Globalization, pages 227-243, National Bureau of Economic Research, Inc.
    32. Gervais, Antoine & Jensen, J. Bradford, 2019. "The tradability of services: Geographic concentration and trade costs," Journal of International Economics, Elsevier, vol. 118(C), pages 331-350.
    33. Breinlich, Holger & Criscuolo, Chiara, 2011. "International trade in services: A portrait of importers and exporters," Journal of International Economics, Elsevier, vol. 84(2), pages 188-206, July.
    34. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    35. Markus Kelle, 2013. "Crossing Industry Borders: German Manufacturers as Services Exporters," The World Economy, Wiley Blackwell, vol. 36(12), pages 1494-1515, December.
    36. Mary Amiti & Donald R. Davis, 2012. "Trade, Firms, and Wages: Theory and Evidence," Review of Economic Studies, Oxford University Press, vol. 79(1), pages 1-36.
    37. Linda Andersson & Patrik Karpaty & Selen Savsin, 2017. "Labour Demand, Offshoring and Inshoring: Evidence from Swedish Firm-level Data," The World Economy, Wiley Blackwell, vol. 40(2), pages 240-274, February.
    38. Andrea Ariu, 2016. "Services versus goods trade: a firm-level comparison," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 19-41, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Martina Magli, 2020. "The Direct and Indirect Effect of Services Offshoring on Local Labour Market Outcomes," CESifo Working Paper Series 8413, CESifo.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Martina Magli, 2020. "The Direct and Indirect Effect of Services Offshoring on Local Labour Market Outcomes," CESifo Working Paper Series 8413, CESifo.
    2. Ariu, Andrea & Mayneris, Florian & Parenti, Mathieu, 2020. "One way to the top: How services boost the demand for goods," Journal of International Economics, Elsevier, vol. 123(C).
    3. Eppinger, Peter S., 2019. "Service offshoring and firm employment," Journal of International Economics, Elsevier, vol. 117(C), pages 209-228.
    4. Ariu, Andrea & Breinlich, Holger & Corcos, Gregory & Mion, Giordano, 2019. "The interconnections between services and goods trade at the firm-level," Journal of International Economics, Elsevier, vol. 116(C), pages 173-188.
    5. Francesco Bripi & David Loschiavo & Davide Revelli, 2020. "Services trade and credit frictions: Evidence with matched bank–firm data," The World Economy, Wiley Blackwell, vol. 43(5), pages 1216-1252, May.
    6. Carmine Ornaghi & Ilke Van Beveren & Stijn vanormelingen,, 2017. "The impact of service and goods offshoring on employment : Firm-level evidence," Working Paper Research 319, National Bank of Belgium.
    7. Omar Bamieh & Matteo Fiorini & Bernard Hoekman & Adam Jakubik, 2020. "Services Input Intensity and US Manufacturing Employment Responses to the China Shock," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 57(2), pages 333-349, September.
    8. Maria D. Tito, 2019. "Exporters of Services: A Look at U.S. Exporters Outside of the Manufacturing Sector," Finance and Economics Discussion Series 2019-063, Board of Governors of the Federal Reserve System (U.S.).
    9. Andrea Ariu & Giordano Mion, 2017. "Service Trade and Occupational Tasks: An Empirical Investigation," The World Economy, Wiley Blackwell, vol. 40(9), pages 1866-1889, September.
    10. Jan Hogrefe & Jens Wrona, 2015. "Trade, tasks and training: The effect of offshoring on individual skill upgrading," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(4), pages 1537-1560, November.
    11. Aleksandra Parteka & Joanna Wolszczak-Derlacz, 2017. "Workers, Firms and Task Heterogeneity in International Trade Analysis: An Example of Wage Effects of Trade Within GVC," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 5(2), pages 9-25.
    12. Borrs, Linda & Knauth, Florian, 2021. "Trade, technology, and the channels of wage inequality," European Economic Review, Elsevier, vol. 131(C).
    13. Mertens, Matthias, 2020. "Labor market power and the distorting effects of international trade," International Journal of Industrial Organization, Elsevier, vol. 68(C).
    14. De Lyon, Josh & Pessoa, Joao Paulo, 2021. "Worker and firm responses to trade shocks: The UK-China case," European Economic Review, Elsevier, vol. 133(C).
    15. Andrea Ariu, 2016. "Services versus goods trade: a firm-level comparison," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 19-41, February.
    16. Sónia Cabral & Pedro S. Martins & João Pereira dos Santos & Mariana Tavares, 2021. "Collateral Damage? Labour Market Effects of Competing with China—at Home and Abroad," Economica, London School of Economics and Political Science, vol. 88(350), pages 570-600, April.
    17. HASHIMOTO Yuki, 2020. "Global Competition, Worker Retention, and Immigrant Employment in Manufacturing SMEs," Discussion papers 20071, Research Institute of Economy, Trade and Industry (RIETI).
    18. Hongshik Lee & Joonhyung Lee, 2015. "The impact of offshoring on temporary workers: evidence on wages from South Korea," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(3), pages 555-587, August.
    19. Stefano Federico & Enrico Tosti, 2017. "Exporters and Importers of Services: Firm-Level Evidence on Italy," The World Economy, Wiley Blackwell, vol. 40(10), pages 2078-2096, October.
    20. Luisa Gagliardi & Simona Iammarino & Andrés Rodríguez-Pose, 2015. "Offshoring and the Geography of Jobs in Great Britain," SERC Discussion Papers sercd0185, Spatial Economics Research Centre, LSE.

    More about this item

    JEL classification:

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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:26355. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.