Markups and Firm-Level Export Status

40 Pages Posted: 23 Feb 2009 Last revised: 25 Feb 2009

See all articles by Jan De Loecker

Jan De Loecker

Princeton University - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Frederic Warzynski

Aarhus University - Department of Economics and Business Economics

Multiple version iconThere are 3 versions of this paper

Date Written: January 2009

Abstract

We derive an estimating equation to estimate markups using the insight of Hall (1986) and the control function approach of Olley and Pakes (1996). We rely on our method to explore the relationship between markups and export behavior using plant-level data. We find significantly higher markups when we control for unobserved productivity shocks. Furthermore, we find significant higher markups for exporting firms and present new evidence on markup-export status dynamics. More specifically, we find that firms' markups significantly increase (decrease) after entering (exiting) export markets. We see these results as a first step in opening up the productivity-export black box, and provide a potential explanation for the big measured productivity premia for firms entering export markets.

Keywords: Markups, Control Function, Productivity, Exporting Behavior

JEL Classification: L1, F12

Suggested Citation

De Loecker, Jan and Warzynski, Frederic, Markups and Firm-Level Export Status (January 2009). Available at SSRN: https://ssrn.com/abstract=1348021 or http://dx.doi.org/10.2139/ssrn.1348021

Jan De Loecker

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://pages.stern.nyu.edu/~jdeloeck/

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Frederic Warzynski (Contact Author)

Aarhus University - Department of Economics and Business Economics ( email )

hermodsvej 22
DK-8230 Åbyhøj
Denmark
+45 89 48 61 95 (Phone)

HOME PAGE: http://www.hha.dk/~fwa/frederic.htm

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