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Explaining the Size Differences of Exporter Productivity Premia: Theory and Evidence

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  • Ingo Geishecker
  • Philipp J.H. Schröder
  • Allan Sörensen

Abstract

Why is it that exporter productivity premia (EPP) differ so widely in size? We take this question to the theory and to the data. We derive the sectoral EPP in a standard heterogeneous firms trade model and apply the insights from the model to 13 years of data for all Danish manufacturing firms. We show that a significant share of the observed variation in EPPs across sectors, and hence across countries, can be explained by the variation in productivity dispersion, trade costs and the elasticity of substitution.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4630.

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Date of creation: 2014
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Handle: RePEc:ces:ceswps:_4630

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Keywords: intra-industry trade; exporter productivity; firm-level data; heterogeneous firms;

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  1. Chad Syverson, 2003. "Product Substitutability and Productivity Dispersion," NBER Working Papers 10049, National Bureau of Economic Research, Inc.
  2. Aw, B. -Y. & Hwang, A. R., 1995. "Productivity and the export market: A firm-level analysis," Journal of Development Economics, Elsevier, vol. 47(2), pages 313-332, August.
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  4. Paula Bustos, 2009. "Trade Liberalization, Exports and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinean Firms," 2009 Meeting Papers, Society for Economic Dynamics 1029, Society for Economic Dynamics.
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  17. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
  18. Richard Kneller, & Mauro Pisu, . "The Returns to Exporting: Evidence from UK Firms," Discussion Papers 07/04, University of Nottingham, GEP.
  19. Fernando Merino, 2004. "Firms' productivity and internationalization: a statistical dominance test," Applied Economics Letters, Taylor & Francis Journals, vol. 11(13), pages 851-854.
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