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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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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2014/wp-cesifo-2014-02/cesifo1_wp4630.pdf
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Bibliographic Info

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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Related research

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

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  1. Head, Keith & Mayer, Thierry & Ries, John, 2010. "The erosion of colonial trade linkages after independence," Journal of International Economics, Elsevier, vol. 81(1), pages 1-14, May.
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  17. 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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