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Heterogeneous Firms or Heterogeneous Workers? Implications for Exporter Premiums and the Gains from Trade

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Author Info

  • Alfonso Irarrazabal

    (Norges Bank)

  • Andreas Moxnes

    (Dartmouth College and BI Norwegian Business School)

  • Karen Helene Ulltveit-Moe

    (University of Oslo and CEPR)

Abstract

We investigate to what extent worker heterogeneity explains the well-known wage and productivity exporter premiums, employing a matched employer-employee data set for Norwegian manufacturing. The wage premium falls by roughly 50% after controlling for observed and unobserved worker characteristics, while the total factor productivity premium falls by 25% to 40%, suggesting that sorting explains up to half of these premiums. Recent trade models emphasize the role of within-industry reallocation of labor in response to various shocks to the economy. Our findings suggest that aggregate productivity gains due to reallocation may be overstated if not controlling for sorting between firms and workers. © 2013 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 95 (2013)
Issue (Month): 3 (July)
Pages: 839-849

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Handle: RePEc:tpr:restat:v:95:y:2013:i:3:p:839-849

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Web page: http://mitpress.mit.edu/journals/

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Web: http://mitpress.mit.edu/journal-home.tcl?issn=00346535

Related research

Keywords: exports; total factor productivity; input quality; firm heterogeneity; linked employer-employee data;

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Cited by:
  1. Joachim Wagner, 2011. "Productivity and International Firm Activities: What do we know?," Working Paper Series in Economics, University of Lüneburg, Institute of Economics 194, University of Lüneburg, Institute of Economics.
  2. Pedro Martins & Luca David Opromolla, 2011. "Why Ex(Im)porters Pay More: Evidence from Matched Firm-Worker Panels," Working Papers, Banco de Portugal, Economics and Research Department w201123, Banco de Portugal, Economics and Research Department.

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