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

Author

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  • Vincenzo Verardi
  • Joachim Wagner

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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Suggested Citation

  • Vincenzo Verardi & Joachim Wagner, 2012. "Productivity Premia for German Manufacturing Firms Exporting to the Euro-Area and Beyond: First Evidence from Robust Fixed Effects Estimations," The World Economy, Wiley Blackwell, vol. 35(6), pages 694-712, June.
    • Handle: RePEc:bla:worlde:v:35:y:2012:i:6:p:694-712
    DOI: j.1467-9701.2011.01414.x
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    Cited by:

    1. Piotr Ciżkowicz & Michał Kowalczuk & Andrzej Rzońca, 2016. "Heterogeneous determinants of local unemployment in Poland," Post-Communist Economies, Taylor & Francis Journals, vol. 28(4), pages 487-519, October.
    2. Achim Schmillen, 2016. "The Exporter Wage Premium Reconsidered—Destinations, Distances and Linked Employer–Employee Data," Review of Development Economics, Wiley Blackwell, vol. 20(2), pages 531-546, May.
    3. Sánchez, Patricio & Gallego, Elena & Rivero, Dolores & Lago-Peñas, Santiago, 2014. "El impacto de la internacionalización sobre las empresas: Evidencia empírica para el caso español [The impact of internationalization on firms: Empirical evidence for the Spanish case]," MPRA Paper 54602, University Library of Munich, Germany.
    4. Joachim Wagner, 2015. "New Methods for the Analysis of Links between International Firm Activities and Firm Performance: A Practitioner's Guide," The World Economy, Wiley Blackwell, vol. 38(4), pages 704-715, April.
    5. Biewen, Martin & Weiser, Constantin, 2011. "A New Approach to Testing Marginal Productivity Theory," IZA Discussion Papers 6113, Institute of Labor Economics (IZA).
    6. 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, vol. 10(1), pages 70-93, March.
    7. Irene Bertschek & Jan Hogrefe & Fabienne Rasel, 2015. "Trade and technology: new evidence on the productivity sorting of firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(1), pages 53-72, February.
    8. Juan Barboni & Nicolas Ferrari & Hanna Melgarejo & Adriana Peluffo, 2012. "Exports and Productivity: Does Destination Matter?," Revista de Economía y Estadística, Universidad Nacional de Córdoba, Facultad de Ciencias Económicas, Instituto de Economía y Finanzas, vol. 50(1), pages 25-58, Diciembre.
    9. Joachim Wagner, 2018. "Germany’s trade in goods," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer;Deutsche Statistische Gesellschaft - German Statistical Society, vol. 12(1), pages 69-82, April.
    10. Michał Ledóchowski & Piotr Żuk, 2020. "What drives portfolio capital inflows into emerging market economies? The role of the Fed’s and ECB’s balance sheet policies," NBP Working Papers 333, Narodowy Bank Polski.
    11. Joachim Wagner & Yama Temouri, 2021. "Do Outliers and Unobserved Heterogeneity Explain the Exporter Productivity Premium? Evidence from France, Germany and the United Kingdom," World Scientific Book Chapters, in: Joachim Wagner (ed.), MICROECONOMETRIC STUDIES OF FIRMS’ IMPORTS AND EXPORTS Advanced Methods of Analysis and Evidence from German Enterprises, chapter 13, pages 223-236, World Scientific Publishing Co. Pte. Ltd..
    12. Alexander Vogel & Joachim Wagner, 2021. "Robust Estimates of Exporter Productivity Premia in German Business Services Enterprises," World Scientific Book Chapters, in: Joachim Wagner (ed.), MICROECONOMETRIC STUDIES OF FIRMS’ IMPORTS AND EXPORTS Advanced Methods of Analysis and Evidence from German Enterprises, chapter 14, pages 239-263, World Scientific Publishing Co. Pte. Ltd..
    13. René Belderbos & Vincent Van Roy & Leo Sleuwaegen, 2021. "Does trade participation limit domestic firms’ productivity gains from inward foreign direct investment?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 11(1), pages 83-109, March.
    14. Neil Foster-McGregor & Anders Isaksson & Florian Kaulich, 2014. "Importing, exporting and performance in sub-Saharan African manufacturing firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(2), pages 309-336, May.
    15. Ledóchowski, Michał & Żuk, Piotr, 2022. "What drives portfolio capital inflows into emerging market economies? The role of the Fed's and ECB's balance sheet policies," Emerging Markets Review, Elsevier, vol. 51(PB).
    16. Fernanda Ricotta, 2016. "Productivity Differences By Export Destination," Working Papers 201601, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    17. Joachim Wagner, 2016. "International Trade and Firm Performance: A Survey of Empirical Studies since 2006," World Scientific Book Chapters, in: Microeconometrics of International Trade, chapter 2, pages 43-87, World Scientific Publishing Co. Pte. Ltd..
    18. Joachim Wagner, 2016. "From Estimation Results to Stylized Facts: Twelve Recommendations for Empirical Research in International Activities of Heterogeneous Firms," World Scientific Book Chapters, in: Microeconometrics of International Trade, chapter 15, pages 479-514, World Scientific Publishing Co. Pte. Ltd..
    19. Wagner Joachim, 2018. "Active on Many Foreign Markets: A Portrait of German Multi-market Exporters and Importers from Manufacturing Industries," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 238(2), pages 157-182, April.

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • C87 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Econometric Software

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