The Exporter Productivity Premium along the Productivity Distribution

Evidence from Unconditional Quantile Regression with Firm Fixed Effects

by David Powell, Joachim Wagner

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One of the stylized facts from the literature on international activities of heterogeneous firms is the existence of a positive exporter productivity premium — on average, exporting firms are more productive than firms that sell on the national market only. In this paper, the authors look at the productivity distribution of both exporting and non-exporting firms in German manufacturing industries. They recognize that it is potentially important to condition on firm fixed effects for estimation of this exporter premium. They apply a new unconditional quantile estimation technique for panel data to condition on firm fixed effects while estimating the exporter premium throughout the entire productivity distribution. They find that the premium is positive for 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. Mean regression is incapable of detecting this dimension of firm heterogeneity.

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