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Services Trade Policy, Structural Change and Labour Market Adjustments

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  • Nordas, Hildegunn

Abstract

This paper studies how services trade policy contributes to shaping the location of economic activities along international production networks and value chains, and the labour market impact of structural changes induced by services policy changes. The paper starts with mapping linkages between goods and services in production combining the WIOD database with a new dataset that breaks down labour input by business functions. The mapping also traces the channels through which services trade policies that target one link or node in complex production networks affect the composition of input demand, including labour inputs by business function. The role of services trade policy in shaping the location of economic activities is next analysed econometrically. A trans-log input demand equation system is constructed from the augmented WIOD database and services trade policy as measured by the PMR is introduced as shift parameters. The relative importance of trade and technology in shaping factor demand and production patterns has been widely discussed in the literature. To shed light on this question, indicators of ICT use are added as shift parameters in their own right as well as interacted with the PMRs to study to what extent the marginal impact of services trade policy differs with the intensity of ICT use; and conversely to what extent the intensity of ICT use is affected by the level of services trade restrictions. Finally, comparative statics using recent policy changes are presented to illustrate the results and support the policy analysis in the concluding section.

Suggested Citation

  • Nordas, Hildegunn, 2018. "Services Trade Policy, Structural Change and Labour Market Adjustments," Conference papers 332952, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332952
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    File URL: https://ageconsearch.umn.edu/record/332952/files/9107.pdf
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    References listed on IDEAS

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    1. Timmer, Marcel P. & Los, Bart & Stehrer, Robert & de Vries, Gaaitzen J., 2016. "An Anatomy of the Global Trade Slowdown based on the WIOD 2016 Release," GGDC Research Memorandum GD-162, Groningen Growth and Development Centre, University of Groningen.
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