Exports and Productivity Growth: First Evidence from a Continuous Treatment Approach
Center for European Economic Research (ZEW)
University of Lueneburg - Institute of Economics; Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics; Institute for the Study of Labor (IZA)
IZA Discussion Paper No. 2782
Jena Economic Research Paper No. 2007-063
A recent survey of 54 micro-econometric studies reveals that exporting firms are more productive than non-exporters. On the other hand, previous empirical studies show that exporting does not necessarily improve productivity. One possible reason for this result is that most previous studies are restricted to analysing the relationship between a firm's export status and the growth of its labour productivity, using the firms' export status as a binary treatment variable and comparing the performance of exporting and non-exporting firms. In this paper, we apply the newly developed generalised propensity score (GPS) methodology that allows for continuous treatment, that is, different levels of the firms' export activities. Using the GPS method and a large panel data set for German manufacturing firms, we estimate the relationship between a firm's export-sales ratio and its labour productivity growth rate. We find that there is a causal effect of firms' export activities on labour productivity growth. However, exporting improves labour productivity growth only within a sub-interval of the range of firms' export-sales ratios.
Number of Pages in PDF File: 23
Keywords: export-sales ratio, labour productivity, continuous treatment, dose-response function
JEL Classification: F14, F23, L60working papers series
Date posted: May 17, 2007
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