The tradability of services: Geographic concentration and trade costs

By A. Gervais, B. Jensen, Andrew B. Bernard, Robert C. Feenstra, Joe Kaboski, Stephen J. Redding, Peter K. Schott, Jeff Thurk. Journal of International Economics, 2019

135 citations recorded by the source corpus.

In this paper, we use a unique dataset on the distribution of output and demand across regions of the United States to construct measures of trade costs for 969 service and manufacturing industries. Our method is a natural extension of the gravity model of trade and identifies trade costs in the absence of trade data. As expected, our measures of trade costs are higher on average for service industries. However, there is considerable variation across industries within sectors. Using our measures of trade costs, we classify industries into tradable and non-tradable categories and find that tradable service industries account for about the same share of U.S. value added as tradable manufacturing industries. Our results also suggest that tradable services value added is unevenly distributed across geographical regions, that labor productivity and wages are higher on average for tradable industries, and that the potential welfare gains from trade liberalization in the service sector are sizable.

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/866d45f2498d2177bc369b377d4f08c7dffb1b5b

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In Economics and Econometrics

1. Andrea Ascani
2. Alessandra Faggian
3. Sandro Montresor
4. D. Ciriaci
5. Philip McCann

In Strategy and Management

1. Andrea Ascani
2. Alessandra Faggian
3. Sandro Montresor

Citations in the corpus

• The Impact of Services Trade Restrictiveness on Trade Flows (2017, unknown): “…trade restrictions to assess their impact, have proceeded to infer the magnitude of trade costs from observed patterns of trade in services compared to a free trade benchmark (e.g. Gervais and Jensen, 2013; Miroudot et al., 2013; Fontagné et al., 2011; Guillin, 2013; Anderson et al., 2013).”
• The geography of COVID‐19 and the structure of local economies: The case of Italy (2020, background): “As a matter of fact, these markets tend to transcend the regional dimension due to the non-ubiquity of producers (Kemeny and Storper, 2015; Gervais and Jensen, 2019).”