De Loecker: “Detecting Learning by Exporting”


This abstract caught my eye:

Learning by exporting refers to the mechanism whereby firms improve their performance (productivity) after entering export markets. Although this mech- anism is often mentioned in policy documents, a significant share of econometric studies has not found evidence for this hypothesis. This has lead to a view that the correlation between firm-level export status and productivity is a result of a self-selection process of more productive firms becoming exporters. This paper shows that the methods used to come to the latter conclusion suffer from a large internal inconsistency: they rely on an exogenous evolving productivity process. I show how recent proxy estimators can easily be accommodated to incorporate the endogenous process of learning by exporting and can detect sig- nificant productivity gains upon export entry. I apply my empirical model to plant-level data and find substantial additional productivity gains (upon export entry) ranging from 4 to 27 percent.