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Self-Selection into Export Markets by Business Services Firms: Evidence from France, Germany and the United Kingdom

  • Temouri, Yama

    ()

    (Aston University)

  • Vogel, Alexander

    ()

    (Leuphana University Lüneburg)

  • Wagner, Joachim

    ()

    (Leuphana University Lüneburg)

This study reports results from an empirical investigation of business services sector firms that (start to) export, comparing exporters to firms that serve the national market only. We estimate identically specified empirical models using comparable enterprise level data from France, Germany, and the United Kingdom. Exporters are more productive and pay higher wages on average in all three countries. Results for profitability differ across borders – profitability of exporters is significantly smaller in Germany, significantly larger in France, and does not differ significantly in the UK. The results for wages and productivity hold in the years before the export start, which indicates self-selection into exporting of more productive services firms that pay higher wages. The surprising finding of self-selection of less profitable German business services firms into exporting does not show up among firms from France and the UK where no statistically significant relationship between profitability and starting to export is found.

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File URL: http://ftp.iza.org/dp5147.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5147.

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Length: 34 pages
Date of creation: Aug 2010
Date of revision:
Publication status: published in: Structural Change and Economic Dynamics, 2013, 25 (2), 146-158
Handle: RePEc:iza:izadps:dp5147
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  1. Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, vol. 47(1), pages 1-25, February.
  2. Alexander Vogel, 2009. "The German Business Services Statistics Panel 2003 to 2007," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 129(3), pages 515-522.
  3. International Study Group on Exports and Productivity (ISGEP), 2008. "Understanding Cross-Country Differences in Exporter Premia: Comparable Evidence for 14 Countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 144(4), pages 596-635, December.
  4. Schmalensee, Richard., 1987. "Inter-industry studies of structure and performance," Working papers 1874-87., Massachusetts Institute of Technology (MIT), Sloan School of Management.
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  6. Kox, Henk L.M. & Rojas Romasgosa, Hugo, 2010. "Exports and productivity selection effects for Dutch firms," MPRA Paper 24390, University Library of Munich, Germany.
  7. Helmut Fryges & Joachim Wagner, 2008. "Exports and Profitability - First Evidence for German Manufacturing Firms," Working Paper Series in Economics 102, University of Lüneburg, Institute of Economics.
  8. on Exports and Productivity, The International Study Group, 2007. "EXPORTS AND PRODUCTIVITY - comparable evidence for 14 countries," Working Paper Series in Economics and Institutions of Innovation 110, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  9. Markus Kelle & Jörn Kleinert, 2010. "German Firms in Service Trade," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 56(1), pages 51-72.
  10. Mirabelle Muuls & Mauro Pisu, 2007. "Imports and exports at the level of the firm: evidence from Belgium," LSE Research Online Documents on Economics 19711, London School of Economics and Political Science, LSE Library.
  11. John W. Budd & Jozef Konings & Matthew J. Slaughter, 2005. "Wages and International Rent Sharing in Multinational Firms," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 73-84, February.
  12. Yeaple, Stephen & Helpman, Elhanan & Melitz, Marc, 2004. "Export versus FDI with Heterogeneous Firms," Scholarly Articles 3229098, Harvard University Department of Economics.
  13. Daniel S. Hamermesh, 2007. "Viewpoint: Replication in economics," Canadian Journal of Economics, Canadian Economics Association, vol. 40(3), pages 715-733, August.
  14. Joachim Wagner, 2007. "Export Entry, Export Exit, and Productivity in German Manufacturing Industries," Jena Economic Research Papers 2007-062, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  15. Alexander Vogel & Joachim Wagner, 2009. "Exports and Profitability – First Evidence for German Business Services Enterprises," Working Paper Series in Economics 129, University of Lüneburg, Institute of Economics.
  16. Joachim Wagner, 2005. "Exports and Productivity: A Survey of the Evidence fro Firm Level Data," International Trade 0504005, EconWPA.
  17. Alberto Abadie & Guido W. Imbens, 2008. "On the Failure of the Bootstrap for Matching Estimators," Econometrica, Econometric Society, vol. 76(6), pages 1537-1557, November.
  18. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097 Elsevier.
  19. Thorsten Schank & Claus Schnabel & Joachim Wagner, 2010. "Higher wages in exporting firms: self-selection, export effect, or both? First evidence from linked employer-employee data," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 146(2), pages 303-322, June.
  20. Daniel S. Hamermesh, 2000. "The Craft of labormetrics," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 53(3), pages 363-380, April.
  21. Alexander Vogel, 2009. "Exporter performance in the German business services sector," The Service Industries Journal, Taylor & Francis Journals, vol. 31(7), pages 1015-1031, May.
  22. Jozef Konings & Alan Patrick Murphy, 2006. "Do Multinational Enterprises Relocate Employment to Low-Wage Regions? Evidence from European Multinationals," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 142(2), pages 267-286, July.
  23. Breinlich, Holger & Criscuolo, Chiara, 2011. "International trade in services: A portrait of importers and exporters," Journal of International Economics, Elsevier, vol. 84(2), pages 188-206, July.
  24. Wagner, Joachim, 2002. "The causal effects of exports on firm size and labor productivity: first evidence from a matching approach," Economics Letters, Elsevier, vol. 77(2), pages 287-292, October.
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