Linking Productivity to Trade in the Structural Estimation of Production within UK Manufacturing Industries

Marian Rizov and Patrick Walsh ()

The Institute for International Integration Studies Discussion Paper Series from IIIS

Abstract: We estimate productivity dynamics within 4-digit manufacturing industries, using FAME data on UK Companies, from 1994 to 2003. We extend the algorithm in Olley and Pakes (1996) to allow for a selection bias driven by the Melitz (2003) effect (high productivity types selecting to exporting) to get more consistent and unbiased estimates of the parameters of the production function. We demonstrate a link between trade orientation and productivity within industries that is driven by selection, not by learning. Hence aggregate productivity is driven by market share reallocations amongst companies rather than from improvements in company level productivity.

Keywords: Simultaneity; Selection (Exit and Trade) Biases; Productivity Dynamics; UK Manufacturing Companies; within 4-digit industries. (search for similar items in EconPapers)
JEL-codes: D24 F14 (search for similar items in EconPapers)
Date: 2005-12-15
New Economics Papers: this item is included in nep-eff and nep-int
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Citations: View citations in EconPapers (1)

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