Download This PaperTrade Liberalization and Firm Productivity: Estimation Methods Matter
Economic Inquiry, vol. 57(3), July 2019, 1272-1283.
McMaster University, Department of Economics, Working Paper Series, 2016-08
24 Pages Posted: 23 Aug 2016 Last revised: 16 Jun 2023
Date Written: June 11, 2018
Abstract
In this paper we show that the relationship between trade liberalization and fi rm productivity is sensitive to the method used to estimate the production function. We estimate the productivity of Colombian manufacturing plants using the methods of Levinsohn and Petrin (2003), Ackerberg, Caves and Frazer (2015), and Gandhi, Navarro and Rivers (2017) and at times come to surprisingly different conclusions about firm productivity growth after the liberalization. Results from a growth decomposition exercise and from a quantile regression model reinforce the dissimilarity of results across methods.
Keywords: Trade Liberalization, Firm Productivity Distribution, Production Function Estimation, Nonparametric Estimation
JEL Classification: F13, F14, D24, C14
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