Working Papers under review
The Direct and Indirect Effect of Services Offshoring on Local Labour Market Outcomes
This study proves evidence of five new empirical facts on the impact of services offshoring on local labour markets. First, services offshoring increases average employment and wages within local labour markets, much more so in the manufacturing industry than in the services one. Second, positive effects are both on firms directly offshoring services and on non-offshoring firms located in the same local labour market of offshoring ones. Third and fourth, services offshoring increases the differences between firms and between workers. Even when not directly involved in offshoring, larger firms and those paying higher wages benefit the most from services offshoring, as well as workers in managerial and professional occupations or with a higher level of education. Lastly, the paper proves that the definition of a local labour market is pivotal for the results: local area and sector-local area specifications reveal positive impacts of services offshoring, opposite to sectoral one.
Work in Progress
Modes of Trade in Services, a Firm-Level Analysis [working title]
Following the definition by theWTO, services can be traded in 4 different modes: cross-border supply(Mode 1), consumption abroad (Mode 2), commercial presence (Mode 3) and presence of natural person(Mode 4).Very little evidence exists in the literature aiming to identify the relation between different modes of trade in services and firms’ behaviour towards them. I construct a unique dataset merging UK data on firms’ characteristics, services trade and FDI for the period 2009-2016. The first part of the study describes the characteristics of firms involved in services FDI and trade decomposed by sector, type of service and partner country. Given the nature of the data it is possible to identify whether trade in services happens between firms belonging to the same enterprise and to explore changes through time, allowing for a deeper understanding of trade mechanism. Further, we look at the elasticity of substitution between different modes of trade conditional on intangible trade barriers, as measured by the OECD. We contribute to existing literature in two ways: providing a qualitative description of firms' characteristics and preferred mode of trade in services, and estimating the impact of trade barriers on firms’ decision of optimal mode of supply a service.
Productivity Distribution and Firms' Rank, the Role of Services [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.
Trade in Services and Tax Rates (with Andreas Baur, Lisandra Flach and Florian Neumeier) [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.