This paper develops an idea flows theory of trade and growth with heterogeneous firms. New firms learn from incumbent firms, but the diffusion technology ensures entrants learn not only from frontier technologies, but from the entire technology distribution. By shifting the productivity distribution upwards, selection on productivity causes technology diffusion and this complementarity generate...

Productivity Premia for German Manufacturing Firms Exporting to the Euro-Area and Beyond: First Evidence from Robust Fixed Effects Estimations This paper makes three contributions. (1) It summarizes in tabular form a recent literature made of 36 micro-econometric studies for 16 different countries on the relationship between export destination and firm performance. (2) It reports estimates of t...

Productivity the efficiency with which firms transform inputs into outputs is an essential concept in nearly every sub-field of economics. My goal in this lecture is to highlight some recent applied microeconomics research in this area. Most of this literature has focused on private firms, but you should think of “firms” broadly – including e.g. schools and hospitals. A broad “fact” that has mo...

Using data from a randomized control trial in Sri Lanka, this paper explores whether cash and in-kind grants helped microenterprises approach the productivity level of SMEs. The paper first estimates production functions and subsequently treatment effects on TFP levels. Most significantly, more able and more risk-averse owners benefit from the larger in-kind grant. Also, the larger in-kind gran...

Using a merged data set for Scotland comprising the Scottish Global Connections Survey (GCS) and the Annual Respondents Database (ARD), we demonstrate that exporters and those engaged in outward FDI have a productivity advantage over those firms that do not internationalise (both preand post-entry). We then consider the factors that determine which firms in Scotland operate in overseas markets,...

Empirical evidence confirms that trade exposure can shift resources towards the most efficient firms in an industry and induce substantial increases in aggregate productivity. Although recent studies document that much of world trade is controlled by multinational firms, few examine the effect of foreign direct investment decisions on resource allocation and aggregate productivity. This paper p...

Much of recent Trade theory focuses on heterogeneity of firms and the differential impact trade policy might have on firms with different levels of productivity. A common problem is that most firm level dataset do not contain information on output prices of firms which makes it difficult to distinguish between productivity differences and differences in market power between firms. This paper de...

Using a standard definition of productivity growth, it is shown that a country may have higher productivity growth than another country in each sector, but may have a lower productivity growth rate overall. Also, it is shown that popular methods for aggregating firm/industry estimates of productivity growth have a serious problem in that productivity of all firms/industries can go up, but aggre...

We extend the well-known fair wage-effort hypothesis to situations in which firms suffer from negative productivity shocks and test experimentally whether a fair employment hypothesis exists. The fair employment hypothesis stipulates that firms employ workers even if it is not profitable for them in the short run (after a negative productivity shock) in order to induce reciprocal behavior. Our ...

We combine detailed survey data on firms’ organizational practices with information technology (IT) investment measures to test the hypothesis that in addition to decentralization, external focus is another important determinant of returns to IT investment. We argue that IT-intensive firms characterized by decentralization are able to more effectively process and respond to information from the...