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Decomposing firm-level sales variation

Jakob Munch and Daniel Nguyen

Journal of Economic Behavior & Organization, 2014, vol. 106, issue C, 317-334

Abstract: Recently, much of the trade literature has been focused on using firm-specific productivity to explain export heterogeneity. This study provides evidence for the importance of incorporating firm–destination-specific effects such as demand shocks in theories of exporter heterogeneity. Our study estimates the proportion of firm-level sales variation within a product–destination market that can be explained by firm-specific effects such as productivity. We use a highly detailed dataset comprising firm–product–destination-specific exports and correct for truncation as modeled by recent trade theories. We find that the contribution of firm-specific effects varies greatly across products and that it is 45% for the median product. That is, within-destination sales variation is primarily explained by firm–destination-specific heterogeneity for the majority of products.

Keywords: Firm heterogeneity; Firm-level export data; Truncation correction (search for similar items in EconPapers)
JEL-codes: F12 C24 (search for similar items in EconPapers)
Date: 2014
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Working Paper: Decomposing Firm-level Sales Variation (2009) Downloads
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DOI: 10.1016/j.jebo.2014.06.012

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