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The tradability of services: Geographic concentration and trade costs

Antoine Gervais () and J. Jensen ()

Journal of International Economics, 2019, vol. 118, issue C, 331-350

Abstract: 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.

Keywords: Service sector; International trade; Trade costs; Monopolistic competition (search for similar items in EconPapers)
JEL-codes: F1 (search for similar items in EconPapers)
Date: 2019
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Related works:
Working Paper: The Tradability of Services: Geographic Concentration and Trade Costs (2015) Downloads
Working Paper: THE TRADABILITY OF SERVICES: GEOGRAPHIC CONCENTRATION AND TRADE COSTS (2014) Downloads
Working Paper: The Tradability of Services: Geographic Concentration and Trade Costs (2013) Downloads
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