Presenter: Jorge Balat
Paper: “Heterogeneous Firms: Skilled-Labor Productivity and Export Destinations,” joint work with Irene Brambilla and Yuya Sasaki.
Abstract:
This paper studies a systematic link between the choice of export destinations and technology differences across firms. Our premise is that firms differ in the relative efficiency with which they can utilize skilled labor. In a context in which quality provision is skill-intensive and consumers in high-income countries are more willing to pay for quality, exporting firms that are more efficient in the use of skilled labor export relatively more to high-income destinations. The contribution of the paper is twofold. First, we propose a new estimation method of production functions that allows for heterogeneity in the production function coefficients across firms and addresses the aggregation problem when firms are multiproduct. The estimation strategy is based on an extension of the structural control variable approach (Olley and Pakes (1996); Levinsohn and Petrin (2003)) to multi-dimensional heterogeneous parameters. Second, we provide an empirical measure of capability of quality production and show that it is a determinant of the choice of exports, export destinations, and quality using firm-level data from Chile.