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Box 4.6 The number of services jobs liable to be moved abroad: large or small?

T

o identify the tradability of industries and occupations, Jensen and Kletzer (2005) use indicators of regional concentration of production in the United States to group industries into three categories of tradability, leaving a similar number of industries in each category (the more the geographical concentration, the higher the degree of tradability). They then use this degree of tradability of the sector to estimate the number of jobs that are prone to global sourcing. Results are very sensitive to assumptions about what is considered tradable. The first figure below presents possible effects for the U.S. economy (excluding public administration), distinguishing between the agriculture and manufacturing sector, nonpersonal services, and personal services. For each category, the first bar shows the number of workers currently employed, while the second bar shows the number of jobs that may potentially be globally sourced under three possible scenarios. The lowest part considers only the highly concentrated industries as tradable; here fewer than 4.5 million jobs in the nonpersonal services sector could be lost overseas. In contrast, the middle part of each

second bar adds those jobs that could potentially be lost if all jobs in all tradable sectors (including those where production is only relatively geographically concentrated) could be sourced globally. This changes the picture dramatically; more than half the jobs in nonpersonal services could be affected by globalization (about 30 million jobs). In Jensen and Kletzer’s analysis there is a distinct difference in the vulnerability to global sourcing between wholesale and retail activities, which are less concentrated and therefore deemed less prone to global sourcing (about 36 percent of jobs in these sectors are at risk), and professional services (where 71 percent of jobs are at risk). However, technological change may make global sourcing more relevant to the wholesale and retail activities. The top part of the second columns shows that an additional 9.7 million jobs could be lost if the sensitivity to global sourcing for professional sectors were equal to that of the other nonpersonal services (the light gray part in the second column for nonpersonal services). The second figure below shows the same analysis for the European Union (EU15). The figure suggests that the

Jobs and potential for outsourcing, United States

Jobs and potential for outsourcing, EU15

Millions of jobs

Millions of jobs

70

70

60

62

57

55

57

60

50

50

40

40

36

9.7 30 20 10 0

10.3 30

23 25.2

13.5

20

3.6

Agriculture and manufacturing

4.3 Nonpersonal services

24.4 2.4

0.8 6.8

21.8

10

0.3

10.1

4.4

0 Personal services

Agriculture and manufacturing

Nonpersonal services

Personal services

Sources: Jensen and Kletzer 2005; World Bank staff calculations. Note: The first, black bar for each sector represents the number of workers currently employed in that sector. The second bar indicates the number of jobs potentially globally sourced. The black section represents only workers in highly geographically concentrated industries subject to global sourcing; the other two sections represent workers in less geographically concentrated industries (see text).

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Global Economic Prospects 2007  

Managing the Next Wave of Globalization

Global Economic Prospects 2007  

Managing the Next Wave of Globalization

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