Heterogeneous Firms or Heterogeneous Workers? Implications for Exporter Premiums and the Gains from Trade
AbstractWe 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 InfoArticle provided by MIT Press in its journal Review of Economics and Statistics.
Volume (Year): 95 (2013)
Issue (Month): 3 (July)
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Web page: http://mitpress.mit.edu/journals/
Find related papers by JEL classification:
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- F10 - International Economics - - Trade - - - General
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
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Working Papers, Banco de Portugal, Economics and Research Department
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- Martins, Pedro S. & Opromolla, Luca David, 2011. "Why Ex(Im)porters Pay More: Evidence from Matched Firm-Worker Panels," IZA Discussion Papers 6013, Institute for the Study of Labor (IZA).
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