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Product Mix Changes and Performance in Chilean Plants

Author

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  • Roberto Alvarez
  • Claudio Bravo-Ortega
  • Lucas Navarro

Abstract

A recent theoretical literature has given relevance to the study of the relationship between product mix changes and firm productivity. In this paper, taking advantage of a rich dataset for manufacturing plants in Chile during the period 1996-2000, we use matching techniques and a difference in difference approach to estimate the causal impact of product mix changes on productivity and other plant-specific outcomes. Our results suggest a positive and increasing impact of product mix changes on total factor productivity and labor productivity after two years the product mix changes are introduced. We also find positive effects on employment and sales. Nevertheless, this positive effect is mainly driven by firms that add and drop products at the same time. Our results are in line with recent theoretical developments on the study of productivity determinants on multiproduct firms and illustrate how products creation and destruction are a source of within-firm productivity growth.

Suggested Citation

  • Roberto Alvarez & Claudio Bravo-Ortega & Lucas Navarro, 2012. "Product Mix Changes and Performance in Chilean Plants," Working Papers wp366, University of Chile, Department of Economics.
    • Handle: RePEc:udc:wpaper:wp366
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    Cited by:

    1. Ciarli, Tommaso & Coad, Alex & Moneta, Alessio, 2023. "Does exporting cause productivity growth? Evidence from Chilean firms," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 228-239.
    2. Roberto Alvarez & Andrés Zahler, 2014. "Export Mix Changes and Firm Performance: Evidence from Chile," IDB Publications (Working Papers) 85354, Inter-American Development Bank.
    3. Tommaso Ciarli & Alex Coad & Alessio Moneta, 2019. "Exporting and productivity as part of the growth process: Causal evidence from a data-driven structural VAR," LEM Papers Series 2019/39, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    4. Ishani Tewari & Joshua Wilde, 2019. "Product Scope and Productivity: Evidence from India's Product Reservation Policy," Southern Economic Journal, John Wiley & Sons, vol. 86(1), pages 339-362, July.

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