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

39 Pages Posted: 7 Oct 2019 Last revised: 5 Jan 2022

See all articles by Andrea Ariu

Andrea Ariu

Ludwig Maximilian University of Munich (LMU)

Katariina Nilsson Hakkala

ETLA, Research Institute of the Finnish Economy

J. Bradford Jensen

Georgetown University - McDonough School of Business; Peterson Institute for International Economics

Saara Tamminen

Government of the Republic of Finland - VATT Institute for Economic Research

Multiple version iconThere are 2 versions of this paper

Date Written: October 2019

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

Ariu, Andrea and Hakkala, Katariina Nilsson and Jensen, J. Bradford and Tamminen, Saara, Service Imports, Workforce Composition, and Firm Performance: Evidence from Finnish Microdata (October 2019). NBER Working Paper No. w26355, Available at SSRN: https://ssrn.com/abstract=3465373

Andrea Ariu (Contact Author)

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

Katariina Nilsson Hakkala

ETLA, Research Institute of the Finnish Economy ( email )

Lonnrotink. 4 B
FIN-00120 Helsinki, 00120
United States

J. Bradford Jensen

Georgetown University - McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

Saara Tamminen

Government of the Republic of Finland - VATT Institute for Economic Research ( email )

Arkadiankatu 7
P.O Box 1279
Helsinki, FIN-00531
Finland

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