Working Paper: NBER ID: w7688
Authors: Andrew B. Bernard; Jonathan Eaton; J. Bradford Jensen; Samuel Kortum
Abstract: We reconcile international trade theory with findings of enormous plant-level heterogeneity in exporting and productivity. Our model extends basic Ricardian theory to accommodate many countries, geographic barriers, and imperfect competition. Fitting the model to bilateral trade among the United States and its 46 major trade partners, we see how well it can explain basic facts about U.S. plants: (i) productivity dispersion, (ii) the productivity advantage of exporters, (iii) the small fraction who export, (iv) the small fraction of revenues from exporting among those that do, and (v) the much larger size of exporters. We pick up all these basic qualitative features, and go quite far in matching them quantitatively. We examine counterfactuals to assess the impact of various global shifts on productivity, plant entry and exit, and labor turnover in U.S. manufacturing.
Keywords: No keywords provided
JEL Codes: F11; F17; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher productivity (O49) | greater likelihood of exporting (F10) |
| greater likelihood of exporting (F10) | concentration of revenues in the exporting sector (F10) |
| higher productivity (O49) | larger firm size (L25) |
| larger firm size (L25) | greater likelihood of exporting (F10) |