The u-shaped relationship between firm productivity and export intensity

Available from: 
October 2013
Paper author(s): 
Rubina Verma (ITAM)
Bruce McWilliams (ITAM)
Globalization and Trade

Researchers estimate the export premium assuming a fixed difference in productivity between exporters and non-exporters, ignoring productivity differences between firms exporting at different intensities. Using World Bank data on emerging markets, we find a U relationship between productivity and export intensity among regular exporters, i.e. firms that both sell domestically and export. Also, pure (100%) exporters have lower productivity than regular exporters. We theoretically explain observed behavior by introducing heterogeneous costs for serving both domestic and export markets into a Melitz model. A simulation of the model yields estimates of export intensity patterns similar to that observed in the data.


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Research section: 
Lacea 2013 annual meeting
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