Trade in services is often hampered by domestic administrative barriers, even when countries are members of the same regional
trade agreement. We exploit a large reform in the European Union (the EU Service Directive) aimed at reducing such administrative
hurdles in cross-border service provision to estimate its effects on service trade. We employ a difference-in-difference strategy
and a Pseudo Poisson Maximum Likelihood (PPML) panel approach to estimate gravity equations with multiple fixed effects. On
average, the reform increased intra-EU trade in targeted services between a lower bound of 27 percent and an upper bound of
55 percent, translating into an overall welfare increase between 0.35 and 1.04 percent. This effect of the reform on service
trade is corroborated by several robustness and placebo checks. Finally, a disaggregated analysis reveals significant differences
between countries and service sectors.
Forschungsbereich:Industrie-, Innovations- und internationale Ökonomie – Regionalökonomie und räumliche Analyse