Working Papers under review
The Spillover Effect of Services Offshoring on Local Labour Markets (2022)
I provide new empirical evidence on the direct and indirect impact of services offshoring on local labour market employment and wages, using a unique dataset on firms in the UK for the period 2000-2015. Exploiting the variation in firms' services offshoring across labour markets, I show that aggregate local labour employment and wages respond positively to services offshoring. At the firm level, spillovers from offshoring firms to non-offshoring firms partly explain the positive results and services offshoring complementary to firms' production has a larger effect than services offshoring competing with firms' outputs. Finally, I show that services offshoring widens the dispersion of firms within local labour markets.
Media Coverage: The Daily Telegraph
Work in Progress
Taxing Services in the Global Economy (2023), with Andreas Baur, Lisandra Flach and Yoto Yotov [Draft Coming Soon]
Trade in services has gained importance in recent years and accounts for more than 25% of overall trade. However, the intangible nature of services makes it challenging for countries to measure them thoroughly and regulate their trade flows across borders. Further, the lack of effective regulations also create incentives for firms to exploit corporate tax differentials between countries to reduce their tax expenditure. This paper provides empirical evidence on the impact of corporate tax differentials and corporate tax reforms on services trade. Using an event study and a structural gravity framework, we show that the effect of tax reforms on trade in services is not confined to tax havens and highly heterogeneous across different types of services. Our results emphasize the importance of profit shifting beyond destination countries classified as tax havens and the importance of addressing countries’ tax gaps. Presentation: European Trade Study Group 2022 (September 2022, by Andreas Baur), ETH Zurich (September 2022), IFF Workshop 2022 (October 2022).
Should we stay or should we go? Firms' decision on services mode of supply (2023), with Holger Breinlich [Draft Coming Soon]
Despite the increasing importance of services trade, the literature on how services are traded (cross-border, movement of people, foreign investment and consumption abroad) is scarce. We aim to fill this gap by investigating how firms in the UK combine different modes of service supply and highlight the heterogeneity in the elasticity of substitution between modes. Our results highlight the potential losses deriving from uncertainty in the services trade regulation and are informative to policymakers dealing with trade negotiation as in the post Brexit. Presentation: Munich International Economics Retreat (July 2022), European Trade Study Group 2022 (September 2022, by Holger Breinlich)
Media Coverage: The Economist
Productivity Distribution and Firms' Rank, the Role of Services (2021) [working title]
Differences in firms’ characteristics, as productivity, can explain a large share of inequalities across workers. What is most, the link between productivity and wages is stronger within the services than in the manufacturing industry, where a rising number of firms are switching towards services production and trade. Understanding changes in firms’ productivity distribution and the role of trade in services in it, can further contribute to the ongoing discussion on the link between trade and inequality. This paper aims to fulfill the gap and to understand how trade in services affects the dynamics of firms’ rank over the productivity distribution. The study uses a detailed panel dataset of firms’ in Great Britain for the period 2005-2015. Once accounting for differences across sectors and regions, similar firms follow different patterns along with the productivity distribution: some firms do move quantiles in the subsequent periods while others do not. The paper implements a probit model to estimate what are the characteristics that drive some firms to move: Firms trading in services are more likely to move towards a higher percentile of the productivity distribution than non-traders. At the same time, some non-traders are increasing their performance due to spillover from trading firms. Finally, smaller firms and those in more competitive local markets are moving more often within the distribution. As a methodological contribution, the paper highlights some limitation of the recent literature on panel group quantile analysis, which does not account for changes in groups’ composition. The study includes a solution to account for this (potential) bias. Presentation: LMU Munich (March 2021), European Trade Study Group 2021 (September 2021)
Bundling Goods and Services (2023), with Bjorn Thor Arnarson and Andreas Moxnes [working title]
I contributed to the first draft of the paper Does automation erode governments’ tax basis? (Hötte, Theodorakopoulos, Koutroumpis 2021) as part of the Technequality Project.