Are workers more vulnerable in tradable industries?

Reduced trade barriers and lower costs of transportation and information have meant that a growing part of the economy has been exposed to international trade. In particular, this is the case in the service sector. We divide the service sector into a tradable and a non-tradable part using an approach to identify tradable industries utilizing a measure of regional concentration of production. We examine whether the probability of displacement is higher and income losses after displacement greater for workers in tradable services and manufacturing (tradable) than in non-tradable services. We also analyze whether the probability of re-employment is higher for workers displaced from tradable services and manufacturing than from non-tradable services. We find that in the 2000s the probability of displacement is relatively high in tradable services in comparison to non-tradable services and manufacturing. On the other hand, the probability of re-employment is higher for those displaced from tradable services. The largest income losses are found for those who had been displaced from manufacturing. Interestingly, the income losses of those displaced from manufacturing seems mainly to be due to An earlier version of this paper was presented at the 15th annual conference of the European Trade Study Group at the University of Birmingham, the 26th annual conference of the European Association of Labour Economists at University of Ljubljana and the 4th biennial conference of Swedish Economists at Umeå University. & Pär Hansson [email protected] Kent Eliasson [email protected] 1 Growth Analysis, Studentplan 3, 831 40 Östersund, Sweden 2 Department of Economics, Umeå University, 901 87 Umeå, Sweden 3 Growth Analysis, Box 574, 101 31 Stockholm, Sweden 4 Örebro University School of Business, 701 82 Örebro, Sweden 123 Rev World Econ DOI 10.1007/s10290-016-0249-x