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The exporter productivity premium along the productivity distribution: evidence from quantile regression with nonadditive firm fixed effects

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  • David Powell

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  • Joachim Wagner

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Abstract

A vast literature on the international activities of heterogeneous firms finds the existence of a positive exporter productivity premium. On average, exporting firms are more productive than firms that sell on the national market only. The Melitz (Econometrica 71:1695–1725, 2003 ) model, however, has implications for not only mean differences but also differences in the distribution of productivity. Furthermore, exporting firms may be different from non-exporting firms for reasons that are not included in the Melitz model. We believe that conditioning on firm fixed effects and studying the distribution of productivity are both necessary for empirical tests of the Melitz model. This paper is the first to employ a new quantile estimation technique for panel data introduced in Powell (Did the economic stimulus payments of 2008 reduce labor supply? Evidence from quantile panel data estimation. RAND Corporation Publications Department, Santa Monica, 2014 ). We find that the premium is positive at all productivity levels, but highest at the lowest quantiles. These results support theoretical models which suggest that there is a division in productivity between exporters and non-exporters. Copyright Kiel Institute 2014

Suggested Citation

  • David Powell & Joachim Wagner, 2014. "The exporter productivity premium along the productivity distribution: evidence from quantile regression with nonadditive firm fixed effects," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(4), pages 763-785, November.
  • Handle: RePEc:spr:weltar:v:150:y:2014:i:4:p:763-785
    DOI: 10.1007/s10290-014-0192-7
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    2. Hernández Martínez, Pedro Jesús, 2016. "Reassessing the link between firm size and exports," Economics Discussion Papers 2016-25, Kiel Institute for the World Economy (IfW).
    3. repec:bla:etrans:v:25:y:2017:i:2:p:185-238 is not listed on IDEAS
    4. Abeliansky, Ana & Krenz, Astrid, 2015. "Democracy and international trade: Differential effects from a panel quantile regression framework," Center for European, Governance and Economic Development Research Discussion Papers 243, University of Goettingen, Department of Economics.
    5. Joachim Wagner, 2013. "Are low-productive exporters marginal exporters? Evidence from Germany," Economics Bulletin, AccessEcon, vol. 33(1), pages 467-481.
    6. 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.
    7. Hernandez, Pedro J., 2013. "A Note on the Link between Firm Size and Exports," MPRA Paper 51576, University Library of Munich, Germany.
    8. Zheng Fang & Chris Sakellariou, 2016. "Social Insurance, Income and Subjective Well-Being of Rural Migrants in China—An Application of Unconditional Quantile Regression," Journal of Happiness Studies, Springer, vol. 17(4), pages 1635-1657, August.
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    11. Frantisek Cech & Jozef Barunik, 2017. "Measurement of Common Risk Factors: A Panel Quantile Regression Model for Returns," Papers 1708.08622, arXiv.org.
    12. Ingo Geishecker & Philipp J. H. Schröder & Allan Sørensen, 2017. "Explaining the size differences of exporter premia: theory and evidence," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(2), pages 327-351, May.
    13. Chen, Yang & He, Ming & Rudkin, Simon, 2017. "Manufacturing productivity in China: Deconstructing the role of Agglomeration," RIEI Working Papers 2017-04, Xi'an Jiaotong-Liverpool University, Research Institute for Economic Integration.
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    17. Joachim Wagner, 2012. "International trade and firm performance: a survey of empirical studies since 2006," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(2), pages 235-267, June.
    18. Wassie, Tewodros Ayenew, 2017. "Revisiting the causal effects of exporting on productivity: Does price heterogeneity matter?," MPRA Paper 80576, University Library of Munich, Germany.
    19. Alice M. Ellyson & Anirban Basu, 2018. "The New Prescription Drug Paradox: Pipeline Pressure and Rising Prices," NBER Working Papers 24387, National Bureau of Economic Research, Inc.
    20. Valizadeh, Pourya & Smith, Travis A., 2017. "How Did the American Recovery and Reinvestment Act (ARRA) Impact the Material Well-being of SNAP Participants? A Distributional Approach," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258496, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    Exporter productivity premium; Quantile treatment effects; Panel data; F14; C21; C23;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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