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

42 Pages Posted: 14 Oct 2019

See all articles by Andrea Ariu

Andrea Ariu

Ludwig Maximilian University of Munich (LMU)

Katariina Hakkala

Research Institute of Industrial Economics (IFN)

J. Bradford Jensen

Georgetown University - Department of Strategy/Economics/Ethics/Public Policy; Peter G. 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: 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.

Keywords: service offshoring, employment, firm performance

JEL Classification: F100, F140, L800

Suggested Citation

Ariu, Andrea and Hakkala, Katariina and Jensen, J. Bradford and Tamminen, Saara, Service Imports, Workforce Composition, and Firm Performance: Evidence from Finnish Microdata (2019). CESifo Working Paper No. 7858, Available at SSRN: https://ssrn.com/abstract=3467993 or http://dx.doi.org/10.2139/ssrn.3467993

Andrea Ariu (Contact Author)

Ludwig Maximilian University of Munich (LMU) ( email )

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

Katariina Hakkala

Research Institute of Industrial Economics (IFN) ( email )

Grevgatan 34, 2nd floor
S-114 85 Stockholm, SE-102 15
Sweden

J. Bradford Jensen

Georgetown University - Department of Strategy/Economics/Ethics/Public Policy ( email )

Washington, DC 20057
United States

Peter G. 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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