Fisher Center for Real Estate and Urban Economics

This paper addresses the degree to which small and medium sized California professional, technical and scientific firms have been affected by globalization. Drawing on published data and a survey of firms with between 20 and 500 employees, the research examines the broad questions of how tradability of services and of the major occupations within these industries affects employment and wages. Through a survey, the study also examines the degree to which individual firms are participating in globalization and the factors influencing their level of participation. Aggregate data does not indicate that increasing tradability has reduced job growth or wage growth in this industry nationwide, although wages within California are growing more slowly than in other parts of the US. The majority of firms surveyed report that increasing tradability of services has not affected their operations in any way. Of those firms affected (a significant minority), effects are likely to be both positive (increased sales, reduced costs) and negative (increased competition or buy-out pressures). Larger firms were more likely to participate in services trade in some way, while smaller firms appeared to be more vulnerable to the negative effects of increased competition. The research results have implications for the design of trade assistance programs and for assistance programs in response to globalization of services.