Firm-to-firm connections in Colombian imports

The vast majority of world trade flows is between firms. Only recently has research in international trade started to emphasize the importance of the connections between exporters and importers both in aggregate trade flows and in the negative relationship between trade and geographic distance. This chapter documents the role of firm-to-firm connections in trade flows and the formation and duration of these importer-exporter relationships. Using customs data from Colombia for 1995-2014, we are able to identify both the Colombian importing firm and the foreign exporter in every Colombian import and export transaction. We document both the nature of these bilateral trading relationships and their evolution over time

Strapped for cash: the role of financial constraints for innovating firms

This paper makes use of a reform that allowed firms to use patents as stand-alone collateral, to estimate the magnitude of collateral constraints and to quantify the aggregate impact of these constraints on misallocation and productivity. Using matched firm-bank data for Norway, we find that bank borrowing increased for firms affected by the reform relative to the control group. We also find an increase in the capital stock, employment and innovation as well as equity funding. We interpret the results through the lens of a model of monopolistic competition with potentially collateral constrained heterogeneous firms. Parameterizing the model using well-identified moments from the reduced form exercise, we find quantitatively large gains in output per worker in the sectors in the economy dominated by constrained (and intangible-intensive) firms. The gains are primarily driven by capital deepening, whereas within-industry misallocation plays a smaller role

Globalization: a woman’s best friend? Exporters andthe gender wage gap

While the impact of globalization on income inequality has received a lot of attention, little is known about its effect on the gender wage gap (GWG). This study argues that there is a systematic difference in the GWG between exporting firms and non-exporters. By the virtue of being exposed to higher competition, exporters require greater commitment and flexibility from their employees. If commitment is not easily observable and women are perceived as less committed workers than men, exporters will statistically discriminate against female employees and will exhibit a higher GWG than non-exporters. We test this hypothesis using matched employer-employee data from the Norwegian manufacturing sector from 1996 to 2010. Our identification strategy relies on an exogenous shock, namely, the legislative changes that increased the length of the parental leave that is available only to fathers. We argue that these changes have narrowed the perceived commitment gap between the genders and show that the initially higher GWG observed in exporting firms relative to nonexporters has gone down after the changes took place

International R&D spillovers from trade

In an influential paper from 1995, "International R&D spillovers", David Coe and Elhanan Helpman use data on trade and R&D expenditures for 22 countries to estimate the effects of a country's own R&D effort and the R&D effort of its trade partners on the country's TFP. They use a model of endogenous, innovation-driven growth as basis for the empirical equations. The main idea is that a country benefits from the cumulative R&D stock of its trade partners as well as its own R&D stock, through spillover effects from trade in intermediate inputs. The intermediate inputs can be horizontally differentiated, which means that a new input is equally good as an old, and investment in R&D increases the number of available varieties. The inputs can also be vertically differentiated, so that the development of a new input will replace an old one because of its increased quality. In the endogenous growth framework, R&D investments are made by firms seeking monopoly profits in imperfectly competetive markets. This R&D effort generates a product or process than can be patented and give rise to a profit for the firm, as well as a non-appropriable product that will increase the country's stock of knowledge. This non-appropriable part is what generates the spillover effect. In the case of horizontally differentiated inputs, the investments in R&D increase the stock of knowledge through an increase in the number of available inputs, which in turn decreases future R&D costs. With vertically differentiated inputs, the development of a higher quality input will enable future entrepreneurs to build on a higher quality foundation. In both cases, the stock of knowledge increases and there are spillovers from current to future R&D activities. Coe and Helpman (1995) argue that since intermediate inputs are traded internationally, a country's productivity depends on its own R&D stock as well as the R&D stock of its trade partners. The domestic R&D stock is constructed as the sum of the country's cumulative R&D expenditures, multiplied by a constant depreciation factor. In the basic specification used in Coe and Helpman (1995), the foreign R&D stock variable is constructed as a weighted sum of the R&D stocks of the country's trade partners, where the weight is the imports from one country as share of the total imports. They find a positive and significant effect of both R&D stocks on the country's TFP, and interpret this as evidence that there are significant international R&D spillovers from trade. Norway is one of the countries used in the paper. I use panel data on Norwegian firms to see whether this effect of imported R&D spillovers can be found on the firm level in Norway. The data set consists of data from the accounting and manufacturing statistics, as well as data on trade and R&D expenditures for Norwegian firms. This is combined with data on R&D expenditures on the sector level for 22 member countries of the OECD. The variables are constructed on the basis of the variables used in Coe and Helpman (1995) with some adjustments to fit the data set at hand. I estimate the basic specification from Coe and Helpman (1995) using the fixed effects estimator. The software used for the estimations is Stata 11. I find a positive and significant effect of the firm's own R&D stock. However, the foreign R&D stock appears to have no significant impact on the productivity of the firms. This indicates that any spillover effects that Norway might get from foreign R&D, are not transmitted through each firm's imported intermediate inputs. I also estimate several extensions of the original specification. In the first extension, I substitute the firm's own R&D stock with the lagged R&D expenditure, because of the nonstationarity of the R&D stock variable. In the second, the weights are changed to reflect the fact that a firm can purchase intermediate inputs domestically as well as internationally. The foreign R&D stock variable is then constructed using the imports from one country as share of total purchase of intermediate inputs as weights. The third extension is aggregating the foreign R&D stock variable to the sector level, to see if I can detect any intra-industry spillovers that are transmitted through trade in intermediate inputs. The positive and significant effect of the firm's own R&D stock is stable in the various specifications. The foreign R&D stock variable is however not statistically significant at any of the conventional levels. This confirms the indication that any spillover effects do not emanate from each firm's imports of intermediate inputs, and it also indicates that any spillover effects have to appear at a more aggregated level

Strapped for Cash: The Role of Financial Constraints for Innovating Firms

This paper makes use of a reform that allowed firms to use patents as stand-alone collateral, to estimate the magnitude of collateral constraints and to quantify the aggregate impact of these constraints on misallocation and productivity. Using matched firm-bank data for Norway, we find that bank borrowing increased for firms affected by the reform relative to the control group. We also find an increase in the capital stock, employment and innovation as well as equity funding. We interpret the results through the lens of a model of monopolistic competition with potentially collateral constrained heterogeneous firms. Parameterizing the model using well-identified moments from the reduced form exercise, we find quantitatively large gains in output per worker in the sectors in the economy dominated by constrained (and intangible-intensive) firms. The gains are primarily driven by capital deepening, whereas within-industry misallocation plays a smaller role

Working across Time Zones: Exporters and the Gender Wage Gap

This study argues that there is a systematic difference in the gender wage gap (GWG) between exporting firms and non-exporters. Exporters may require greater commitment from their employees, such as working particular hours to communicate with partners in different time zones or travelling at short notice, and may therefore disproportionately reward employee flexibility. If women are less flexible, or perceived as such, exporters will exhibit a higher GWG than non-exporters. This hypothesis is examined using matched employer-employee data from the Norwegian manufacturing sector for 1996–2010. The results suggest a firm's entry into exporting increases the GWG by about 3 percentage points for college educated workers. A lower overlap in business hours between the Norwegian exporter and its foreign markets and a greater need for interactions with foreign buyers are associated with a higher GWG

Nordic Workshop on Matched Employer-Employee Data

Abstract While the impact of globalization on income inequality has received a lot of attention, little is known about its effect on the gender wage gap (GWG). This study argues that there is a systematic difference in the GWG between exporting firms and non-exporters. By the virtue of being exposed to higher competition, exporters require greater commitment and flexibility from their employees. If commitment is not easily observable and women are perceived as less committed workers than men, exporters will statistically discriminate against female employees and will exhibit a higher GWG than non-exporters. We test this hypothesis using matched employer-employee data from the Norwegian manufacturing sector from 1996 to 2010. Our identification strategy relies on an exogenous shock, namely, the legislative changes that increased the length of the parental leave that is available only to fathers. We argue that these changes have narrowed the perceived commitment gap between the genders and show that the initially higher GWG observed in exporting firms relative to nonexporters has gone down after the changes took place