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TRADE LIBERALIZATION AND FIRM PRODUCTIVITY: ESTIMATION METHODS MATTER
Author(s) -
Kealey John,
Pujolas Pau S.,
SosaPadilla César
Publication year - 2019
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12767
Subject(s) - economics , productivity , quantile regression , liberalization , estimation , production (economics) , econometrics , free trade , production function , international trade , microeconomics , macroeconomics , market economy , management
In this paper, we show that the relationship between trade liberalization and firm productivity is sensitive to the method used to estimate the production function. We estimate the productivity of Colombian manufacturing plants using the methods of Levinsohn and Petrin, Ackerberg et al., and Gandhi et al. and at times come to surprisingly different conclusions about firm productivity growth after the liberalization. Results from a growth decomposition exercise and from a quantile regression model reinforce the dissimilarity of results across methods. ( JEL F13, 14, D24, C14)