Working Paper: CEPR ID: DP12173
Authors: Omar Bamieh; Matteo Fiorini; Bernard Hoekman; Adam Jakubik
Abstract: We present industry-level evidence that manufacturing sectors that make use of services as inputs more intensively are more robust to shocks from import competition. Specifically, the negative effect of the China shock on US manufacturing employment is lower for industries with high services input intensity (SII). Furthermore, our analysis reveals significant heterogeneity in the impact of different types of services, which points towards a fruitful research agenda on the role of services as a determinant of firm competitiveness.
Keywords: manufacturing employment; china shock; import competition; servicification; services input use
JEL Codes: F16; L8
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased import competition from China (F69) | Negative employment impacts on U.S. manufacturing sectors (F69) |
| High services input intensity (SII) (L89) | Greater resilience to negative employment impacts of the China shock (F66) |
| Services input intensity (SII) (L80) | Effect of increased import competition from China on U.S. manufacturing employment (F66) |
| 1,000-unit increase in import exposure per worker (F66) | Reduction in employment share (J63) |
| Higher levels of services input intensity (SII) (L89) | Statistically insignificant employment reduction effect (J63) |