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Working Paper 05-9

Tradable Services: Understanding the Scope and Impact of Services Outsourcing

by J. Bradford Jensen, Peterson Institute for International Economics
and Lori G. Kletzer, Peterson Institute for International Economics

September 2005


What services can really be traded? By looking at which services are traded within the United States, the authors identify services that can be traded internationally. They find a significant number of service industries and occupations that are tradable--for example, financial services, software publishing and computer-related occupations not in the information technology sector, and legal services--and substantial employment in these activities. In addition, workers in these tradable activities have significantly higher incomes than similar workers in nontraded activities. But just because an activity is tradable does not mean that jobs will move to lower-cost locations. The authors suggest that many of these tradable service activities are consistent with US comparative advantage. One would expect that as technological and organizational change increases the potential for trade in services, US economic activity will shift to service industries where the United States has an edge. Therefore, further liberalization in international services trade would directly benefit workers and firms in the United States, and policymakers should devote more attention to understanding the impediments to services trade.

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RELATED LINKS

Book: Global Trade in Services: Fear, Facts, and Offshoring September 2011

Policy Brief 12-10: Framework for the International Services Agreement April 2012

Policy Brief 08-1: "Fear" and Offshoring: The Scope and Potential Impact of Imports and Exports of Services January 2008

Book: Accelerating the Globalization of America: The Role for Information Technology June 2006

Paper: This is Bangalore Calling: Hang Up or Speed Dial? What Technology-Enable International Trade in Services Means for the US Economy January 15, 2005

Paper: Outsourcing--Stains on the White Collar? February 2004

Policy Brief 03-11: Globalization of IT Services and White Collar Jobs: The Next Wave of Productivity Growth December 2003