Service Trade, Regional Specialization, and Welfare

CAMA Working Paper 41/2023

64 Pages Posted: 27 Aug 2023

See all articles by Yuancheng Han

Yuancheng Han

University of Queensland

Jorge Miranda-Pinto

University of Queensland

Satoshi Tanaka

University of Queensland

Date Written: August 2023

Abstract

How much does trade in services affect regional production specialization and welfare? Using unique Canadian trade data, we document that the size of inter-provincial service trade is comparable to that of good trade, and that net exports of services are highly correlated with the value-added share of tradable services across provinces. With a spatial model featuring domestic and international trade, we quantify the effects of service trade. Our results highlight that domestic service trade significantly promotes regional specialization, with heterogeneous welfare gains that reduce regional disparities. Conversely, international service trade generates more uniform welfare gains across provinces.

Keywords: service trade, domestic trade, regional specialization, regional disparities, welfare, structural transformation

JEL Classification: E20, F10, L16

Suggested Citation

Han, Yuancheng and Miranda-Pinto, Jorge and Tanaka, Satoshi, Service Trade, Regional Specialization, and Welfare (August 2023). CAMA Working Paper 41/2023, Available at SSRN: https://ssrn.com/abstract=4547675 or http://dx.doi.org/10.2139/ssrn.4547675

Yuancheng Han

University of Queensland ( email )

St Lucia
Brisbane, Queensland 4072
Australia

Jorge Miranda-Pinto

University of Queensland ( email )

St Lucia
Brisbane, Queensland 4072
Australia

Satoshi Tanaka (Contact Author)

University of Queensland ( email )

St Lucia
Brisbane, Queensland 4072
Australia

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