Firm heterogeneity and development: Evidence from Latin American countries

Chang, Han-Hsin; Marrewijk, Charles van

doi:10.1080/09638199.2012.704063

Cited by 15 publications

(18 citation statements)

References 44 publications

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“…Additionally, following Galiani and Porto (2010), the returns to years of potential labor market experience and its squared term are also allowed to vary across periods; hence, their interactions with year effects are also included. Finally, since both the theoretical and empirical literature find a firm size-productivity premium (Berlingieri, Calligaris, and Criscuolo, 2018;Chang and van Marrewijk 2013;Fernandes 2007) and firm size-wage premium (Berlingieri, Calligaris, and Criscuolo, 2018;Helpman, Itskhoki, and Redding 2010), trade liberalization is likely to intensify the effect that large-sized firms pay higher wages. Therefore, following the estimation strategy of Fernendez ( 2007), this study also estimates the specification that includes an interaction term between output tariff and the large-sized firm dummy in addition to the FDI and foreign technology.…”

Section: Trade Liberalization and Industry Wage Premiumsmentioning

confidence: 99%

Trade liberalization and wage inequality: Evidence from Chile

Murakami

2021

The Journal of International Trade & Economic Development

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This study analyzes the impacts of further tariff reductions resulting from the proliferation of regional trade agreements on wage inequality between skilled and unskilled workers in Chile in the 2000s. Thus, we use data on effective tariff rates instead of uniform most-favored-nation rates to measure trade liberalization. We match panel data on industry characteristics, including effective tariff rates, to pooled individual cross-section data from national household surveys at the industry level. We find that the reductions in effective tariffs on final goods increase industry wage premiums, thus suggesting that liberalization-induced productivity improvements lead to higher wages. However, considering the differential impacts on different skill groups, we find that the reductions significantly increase industry wage premiums only for skilled workers, thereby increasing wage inequality. Moreover, the impact is larger in skilled workers employed in large-sized firms. The results are robust to the inclusion of other industry characteristics, including input tariffs, the share of foreign-owned capital, and payments to foreign technology. The results are also robust to the inclusion of industry productivity, which is likely to affect the effective tariffs and industry wage premiums simultaneously, as well as control for the potential endogeneity of trade policy.

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Section: Trade Liberalization and Industry Wage Premiumsmentioning

confidence: 99%

Trade liberalization and wage inequality: Evidence from Chile

Murakami

2021

The Journal of International Trade & Economic Development

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“…For services firms in Finland, the ranking is the same, but without the two-way trader group. 12 See Chang and van Marrewijk (2013) for Latin America and Melitz and Redding (2014) for a review. 13 As usual when using large micro-data sets, the source of the data are statistical agencies and confidentiality precludes these data from being publicly available.…”

Section: Datamentioning

confidence: 99%

Trade, productivity and profitability: On profit levels and profit margins

2018

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Do firms engaging in international trade have higher or lower profit margins? It is well established that more productive firms engage in trading activities and as a result have higher profit levels. We use two theoretical models (the Melitz model and the Egger–Kreickemeier model) to clarify the relationship between productivity, trade activity, and profit margins and derive three hypotheses: (I) profit margins rise as productivity rises for domestic firms; (II) profit margins rise as productivity rises for trading firms; and (III) profit margins are not higher for trading firms than for domestic firms. We test these hypotheses using detailed micro‐data for Finland (2005–10) and the Netherlands (2002–10). We find strong support for Hypothesis I (in favour of the Melitz model), Hypothesis II (in favour of both models) and Hypothesis III (in favour of the Egger–Kreickemeier model). A propensity score matching analysis provides further support for Hypothesis III.

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“…The first paper by Chang and van Marrewijk (2013) sets the stage for this special issue, analysing distributions for normalized productivity differences in a cross section for the year 2006 and 15 developing countries in Latin America. 4 Within this group of developing countries they uncover a positive bivariate relationship between firm productivity and the level of development.…”

Section: Findings On Firm Heterogeneitymentioning

confidence: 99%