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Export Growth and Factor Market Competition: Theory and Evidence

Julian Emami Namini (), Giovanni Facchini () and Ricardo López
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Julian Emami Namini: Erasmus University Rotterdam

No 28, Working Papers from Brandeis University, Department of Economics and International Businesss School

Abstract: Empirical evidence suggests that sectoral export growth decreases exporters' survival probability, whereas non-exporters are unaffected. Models with firm heterogeneity in total factor productivity predict the opposite. To solve this puzzle, we develop a two-factor framework where firms differ in factor shares. In this model, export growth increases competition for the factor used intensively by exporters, eliminating some of them, while non-exporters benefit. Our empirical analysis shows that the forces highlighted in the model drive the firm selection experienced by the Chilean manufacturing sector, suggesting that heterogeneity in factor shares is crucial to understand how firms react to trade liberalization.

Keywords: Firm Dynamics; Two-factor Trade Model; Firm Heterogeneity in Factor Input Shares; Chile; Manufacturing Industry (search for similar items in EconPapers)
JEL-codes: F12 F14 F16 L11 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2011-02
New Economics Papers: this item is included in nep-bec and nep-int
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http://www.brandeis.edu/economics/RePEc/brd/doc/Brandeis_WP28.pdf First version, 2011 (application/pdf)

Related works:
Working Paper: Export growth and factor market competition: theory and evidence (2011) Downloads
Working Paper: Export Growth and Factor Market Competition: Theory and Evidence (2011) Downloads
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