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

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

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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  1. Joachim Wagner, 2012. "International trade and firm performance: a survey of empirical studies since 2006," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 148(2), pages 235-267, June.
  2. Keith Head & Thierry Mayer & John Ries, 2008. "The erosion of colonial trade linkages after independence," Sciences Po publications 6951, Sciences Po.
  3. Stephen Redding, 2010. "Theories of Heterogeneous Firms and Trade," CEP Discussion Papers dp0994, Centre for Economic Performance, LSE.
  4. 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.
  5. Alvaro Garcia Marin & Nico Voigtländer, 2013. "Exporting and Plant-Level Efficiency Gains: It's in the Measure," NBER Working Papers 19033, National Bureau of Economic Research, Inc.
  6. David Greenaway & Richard Kneller, 2007. "Firm heterogeneity, exporting and foreign direct investment," Economic Journal, Royal Economic Society, vol. 117(517), pages F134-F161, 02.
  7. Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-65, June.
  8. Richard Kneller & Mauro Pisu, 2010. "The returns to exporting: evidence from UK firms," Canadian Journal of Economics, Canadian Economics Association, vol. 43(2), pages 494-519, May.
  9. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jenson & Samuel Kortum, 2000. "Plants and Productivity in International Trade," NBER Working Papers 7688, National Bureau of Economic Research, Inc.
  10. 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.
  11. Joao Santos Silva & Silvana Tenreyro, 2005. "The Log of Gravity," CEP Discussion Papers dp0701, Centre for Economic Performance, LSE.
  12. Jan De Loecker, 2004. "Do Exports Generate Higher Productivity? Evidence from Slovenia," LICOS Discussion Papers 15104, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  13. Erzo G. J. Luttmer, 2007. "Selection, Growth, and the Size Distribution of Firms," The Quarterly Journal of Economics, MIT Press, vol. 122(3), pages 1103-1144, 08.
  14. Paula Bustos, 2011. "Trade Liberalization, Exports, and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinian Firms," American Economic Review, American Economic Association, vol. 101(1), pages 304-40, February.
  15. José C. Fariñas & Ana Martín-Marcos, 2007. "Exporting and Economic Performance: Firm-level Evidence of Spanish Manufacturing," The World Economy, Wiley Blackwell, vol. 30(4), pages 618-646, 04.
  16. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-97, November.
  17. Jonathan Eaton & Samuel S. Kortum & Sebastian Sotelo, 2012. "International Trade: Linking Micro and Macro," NBER Working Papers 17864, National Bureau of Economic Research, Inc.
  18. Chad Syverson, 2003. "Product Substitutability and Productivity Dispersion," NBER Working Papers 10049, National Bureau of Economic Research, Inc.
  19. Fernando Merino, 2004. "Firms' productivity and internationalization: a statistical dominance test," Applied Economics Letters, Taylor & Francis Journals, vol. 11(13), pages 851-854.
  20. Ackerberg, Daniel & Caves, Kevin & Frazer, Garth, 2006. "Structural identification of production functions," MPRA Paper 38349, University Library of Munich, Germany.
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