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Do outliers and unobserved heterogeneity explain the exporter productivity premium? Evidence from France, Germany and the United Kingdom

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  • Joachim Wagner

    ()
    (Leuphana University Lueneburg)

  • Yama Temouri

    ()
    (Aston Business School)

Abstract

A stylized fact from the literature on the Micro-econometrics of International Trade and a central implication of the heterogeneous firm models from the New New Trade Theory is that exporters are more productive than non-exporters. It is argued that this exporter productivity premium is due to extra costs of exporting that can be covered only by more productive firms. However, in recent papers that control for extreme observations and unobserved firm heterogeneity by applying a highly robust fixed-effects estimator, no such exporter productivity premium is found for firms from manufacturing and services industries in Germany. This paper uses enterprise level panel data for France, Germany and the United Kingdom from 2003 to 2008 to systematically investigate the role of outliers and unobserved firm heterogeneity for estimates of the exporter productivity premium. We report that outliers do have an influence on the estimated exporter productivity premium. We argue that the vanishing exporter premium in robust fixed effects estimations that is reported for all three countries is caused by characteristics of firms that start or stop to export over the period under investigation, and that are not representative for the bulk of firms that either export or not.

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File URL: http://www.accessecon.com/Pubs/EB/2013/Volume33/EB-13-V33-I3-P180.pdf
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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 33 (2013)
Issue (Month): 3 ()
Pages: 1931-1940

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Handle: RePEc:ebl:ecbull:eb-13-00437

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Keywords: Export; productivity premium; outlier; unobserved heterogeneity; robust estimation;

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  1. Joachim Wagner, 2012. "International trade and firm performance: a survey of empirical studies since 2006," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 148(2), pages 235-267, June.
  2. Helpman, Elhanan, 2006. "Trade, FDI and the Organization of Firms," CEPR Discussion Papers 5589, C.E.P.R. Discussion Papers.
  3. Vincenzo Verardi & Joachim Wagner, 2010. "Productivity premia for German manufacturing firms exporting to the Euro-area and beyond: First evidence from robust fixed effects estimations," Working Paper Series in Economics 172, University of Lüneburg, Institute of Economics.
  4. Vincenzo Verardi & Christophe Croux, 2009. "Robust regression in Stata," Stata Journal, StataCorp LP, vol. 9(3), pages 439-453, September.
  5. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2011. "The Empirics of Firm Heterogeneity and International Trade," NBER Working Papers 17627, National Bureau of Economic Research, Inc.
  6. Melitz, Marc J, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," CEPR Discussion Papers 3381, C.E.P.R. Discussion Papers.
  7. Stephen Redding, 2010. "Theories of Heterogeneous Firms and Trade," CEP Discussion Papers dp0994, Centre for Economic Performance, LSE.
  8. Eric J. Bartelsman & Mark Doms, 2000. "Understanding productivity: lessons from longitudinal microdata," Finance and Economics Discussion Series 2000-19, Board of Governors of the Federal Reserve System (U.S.).
  9. Alexander Vogel & Joachim Wagner, 2011. "Robust estimates of exporter productivity premia in German business services enterprises," Working Paper Series in Economics 207, University of Lüneburg, Institute of Economics.
  10. Verardi, Vincenzo & Wagner, Joachim, 2010. "Robust Estimation of Linear Fixed Effects Panel Data Models with an Application to the Exporter Productivity Premium," IZA Discussion Papers 4928, Institute for the Study of Labor (IZA).
  11. David Greenaway & Richard Kneller, 2007. "Firm heterogeneity, exporting and foreign direct investment," Economic Journal, Royal Economic Society, vol. 117(517), pages F134-F161, 02.
  12. Daniel S. Hamermesh, 2000. "The Craft of labormetrics," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 53(3), pages 363-380, April.
  13. Gal, Peter N. & Hijzen, Alexander & Wolf, Zoltan, 2013. "The Role of Institutions and Firm Heterogeneity for Labour Market Adjustment: Cross-Country Firm-Level Evidence," IZA Discussion Papers 7404, Institute for the Study of Labor (IZA).
  14. Helpman, Elhanan, 2011. "Understanding Global Trade," Economics Books, Harvard University Press, number 9780674060784.
  15. Vincenzo Verardi & Alice McCathie, 2012. "The S-estimator of multivariate location and scatter in Stata," Stata Journal, StataCorp LP, vol. 12(2), pages 299–307, June.
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