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Productivity Premia for German Manufacturing Firms Exporting to the Euro-Area and Beyond: First Evidence from Robust Fixed Effects Estimations

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  • Verardi, Vincenzo

    ()
    (Free University of Brussels)

  • Wagner, Joachim

    ()
    (Leuphana University Lüneburg)

Abstract

This paper makes three contributions. (1) It summarizes in tabular form a recent literature made of 36 micro-econometric studies for 16 different countries on the relationship between export destination and firm performance. (2) It reports estimates of the productivity premium of German firms exporting to the Euro-zone and beyond, controlling for unobserved time invariant firm specific effects, and tests for self-selection of more productive firms into exporting beyond the Euro-zone. (3) It corrects a serious flaw in hitherto published studies that ignore the potentially disastrous consequences of extreme observations, or outliers. The paper shows that estimates of the exporter productivity premium by destination are driven by a small share of outliers. Using a "clean" sample without outliers the estimated productivity premium of firms that export to the Euro-zone only is no longer much smaller that the premium of firms that export beyond the Euro-zone, too, and the premium itself over firms that serve the German market only is tiny. Furthermore, an ex-ante differential that is statistically significant and large only shows up for enterprises that exported to the Euro-zone already and start to export to countries outside the Euro-zone. These conclusions differ considerably from those based on non-robust standard regression analyses.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4964.

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Length: 49 pages
Date of creation: May 2010
Date of revision:
Publication status: published in: The World Economy, 2012, 35 (6), 694-712
Handle: RePEc:iza:izadps:dp4964

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Keywords: exporter productivity premium; panel data; robust estimation; export destinations;

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References

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Citations

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Cited by:
  1. Joachim Wagner & Yama Temouri, 2013. "Do outliers and unobserved heterogeneity explain the exporter productivity premium? Evidence from France, Germany and the United Kingdom," Economics Bulletin, AccessEcon, vol. 33(3), pages 1931-1940.
  2. Neil Foster-McGregor & Anders Isaksson & Florian Kaulich, 2013. "Importing, Exporting and Performance in Sub-Saharan African Manufacturing Firms," wiiw Working Papers, The Vienna Institute for International Economic Studies, wiiw 96, The Vienna Institute for International Economic Studies, wiiw.
  3. Achim Schmillen, 2011. "The Exporter Wage Premium Reconsidered - Destinations, Distances and Linked Employer-Employee Data," Working Papers, Bavarian Graduate Program in Economics (BGPE) 111, Bavarian Graduate Program in Economics (BGPE).
  4. Joachim Wagner, 2012. "International trade and firm performance: a survey of empirical studies since 2006," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 148(2), pages 235-267, June.
  5. 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.
  6. Wagner, Joachim, 2010. "From Estimation Results to Stylized Facts: Twelve Recommendations for Empirical Research in International Activities of Heterogeneous Firms," IZA Discussion Papers 5175, Institute for the Study of Labor (IZA).
  7. Adriana Peluffo & Juan Barboni & Nicolás Ferrari & Hanna Melgarejo, 2013. "Exports and productivitgy: does destination matter?," Documentos de Trabajo (working papers) 13-06, Instituto de Economía - IECON.
  8. Jerzy Cieślik & Eugene Kaciak & Dianne Welsh, 2012. "The impact of geographic diversification on export performance of small and medium-sized enterprises (SMEs)," Journal of International Entrepreneurship, Springer, Springer, vol. 10(1), pages 70-93, March.
  9. Ciżkowicz, Piotr & Kowalczuk, Michał & Rzońca, Andrzej, 2014. "Heterogeneous determinants of local unemployment in Poland," MPRA Paper 56858, University Library of Munich, Germany.
  10. Biewen, Martin & Weiser, Constantin, 2011. "A New Approach to Testing Marginal Productivity Theory," IZA Discussion Papers 6113, Institute for the Study of Labor (IZA).
  11. Joachim Wagner, 2012. "New Methods for the Analysis of Links between International Firm Activities and Firm Performance: A Practitioner’s Guide," Working Paper Series in Economics 227, University of Lüneburg, Institute of Economics.

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