Premium
Decomposing service exports adjustments along the intensive and extensive margin at the firm‐level
Author(s) -
Christen Elisabeth,
Pfaffermayr Michael,
Wolfmayr Yvonne
Publication year - 2019
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/roie.12365
Subject(s) - counterfactual thinking , margin (machine learning) , service (business) , economics , sample (material) , panel data , marginal cost , poisson distribution , econometrics , microeconomics , international economics , industrial organization , monetary economics , business , economy , philosophy , chemistry , statistics , mathematics , chromatography , machine learning , computer science , epistemology
Using a panel data set of Austrian service exporting firms this paper examines the determinants of service exports at the firm/destination country level. We implement a random effects Heckman sample selection firm‐level gravity model as well as a fixed effects Poisson model. Expected firm‐level service exports are decomposed into the intensive and extensive margins of adjustment as a response to counterfactual changes. We find market demand to be a key determinant. Results also suggest high service export potentials due to regulatory reform in partner countries within the EU. Adjustments at the extensive margin only play a marginal role. Increases in firm size as well as changes in distance related costs are most effective in developing new export relationships in services.