SAIL-GSC: Services, Artificial Intelligence, and Labor Markets: Navigating Firms and Workers through modern Global Supply Chains

Services trade has become an increasingly vital component of global supply chains, driven by advancements in information and communication technology (ICT). The ongoing technological revolution, particularly the rise of artificial intelligence (AI), holds the potential to further transform services trade. However, largely due to a lack of detailed data, significant gaps remain in our understanding of how services trade interacts with other forms of globalization, such as goods trade, and how it impacts firms and workers. This project, SAIL-GSC: Services, Artificial Intelligence, and Labor Markets: Navigating Firms and Workers through modern Global Supply Chains, aims to address these gaps through rigorous empirical analysis. The research is structured around three core objectives. First, it will integrate services trade into a broader analysis of firms international activities, including goods trade and foreign direct investment (FDI), to provide new insights into their interrelationships. Second, it will evaluate the causal impact of offshoringboth goods and serviceson labour market outcomes such as wages, job stability, and income inequality, with a focus on the differential effects across various worker types and occupations. Third, it will investigate how technological advancements, particularly AI, influence firms decisions to engage in services trade and the subsequent consequences for workers. By leveraging newly available firm level data on services trade from Denmark, which can be linked to other micro level information on goods trade, foreign affiliates, and employer-employee relationships, the project aims at improving our understanding of the role of services trade in global supply chains. The findings of the project are expected to be relevant not only to academic research but also to policymakers, business leaders, and the general public as they navigate the challenges and opportunities presented by globalization and technological change.