Low-wage countries' competition, reallocation across firms and the quality content of exports

Julien Martin and Isabelle Mejean

PSE - G-MOND WORKING PAPERS from HAL

Abstract: What is the impact of low-wage countries' competition on the quality of high-wage countries' exports? To answer this question, we develop a new method that uses firm-level data to measure quality changes in sectoral exports. Over 1995-2005, we measure a 11% increase in the mean quality of France's aggregate exports, driven by a reallocation of demand in favor of higher quality producers. The phenomenon is significantly more pronounced in markets where the penetration of developing countries has increased while it is negative where firms face increased competitive pressures from high-wage countries. These results are consistent with within-product specialization along the vertical dimension. They suggest that, over the period, France has specialized in the production of higher quality goods. In our data, around one fifth of the measured quality improvement in France's aggregate exports is attributable to low-wage countries' competition. In turn, its increasing specialization in higher quality goods has limited France's market share loss over the period.

Keywords: Firm-Level Data; Quality Heterogeneity; Low-Wage Countries' Competition; Within-product specialization (search for similar items in EconPapers)
Date: 2011-01
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00962485v1
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Citations: View citations in EconPapers (16)

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Related works:
Working Paper: Low-Wage Countries’ Competition, Reallocation Across Firms and the Quality Content of Exports (2012)
Working Paper: Low-Wage Countries' Competition, Reallocation Across Firms and the Quality Content of Exports (2011)
Working Paper: Low-wage countries' competition, reallocation across firms and the quality content of exports (2011)
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