Firm Heterogeneity: do destinations of exports and origins of imports matter?

How do importing activities matter in explaining firm heterogeneity? How firm performances are related to foreign markets heterogeneity? Using a rich database on Italian manufacturing firms, this essay adds new evidence on the relationship between trade status and firm characteristics. We uncover evidence supporting recent theories on firm heterogeneity and international trade, together with some new facts. First, the availability of information on import and export enables us to differentiate firms involved in both trading activities - namely two-way traders - from firms that only export, and from those that only import. We show that firms engaged in both import and export outperform those involved in either importing or exporting only. Second, exploiting firm-level information on the destination of export and the origin of imports, we observe the heterogeneity among firms trading with different type of markets. We show that different destinations of exports and different origins of imports map into distinctive firm characteristics.heterogeneous firms; exports; imports; productivity, performances, destinations

Exporters, Importers and Two-way Traders: the Links between Internationalization, Skills and Wages

How do trade activities affect firms’ employment and wages structures? Using firm level data on Italian manufacturing firms, this paper adds to the existing literature, by assessing how the degree of involvement in international trade impacts on workforce composition, earning levels and wage inequality. We differentiate firms involved in both trading activities - namely two-way traders - from firms that only export, and from those that only import. We show that two-way traders have a higher propensity to employ non-production workers, exhibit significant wage gaps, but also pay higher wages for both production and non production workers, relative to non internationalized firms and to firms which are involved only in either export or import. The paper also looks at how the wages and the skill structure of the trading firms change with the country of destination and origin and with the firms’ sectoral and geographical diversification.heterogeneous firms; exports; imports; wage inequality; skills.

The links between internationalization, skills and wages. The role of differences across firms and across partner countries.

Using firm level data on Italian manufacturing industry, we examine how trade activities are related to workforce composition and wages. We contribute to empirical research on these issues in three ways. First, we provide novel evidence that is consistent with multi-attribute models on firm heterogeneity and trade. In fact we show that even after controlling for various firm characteristics, including size and capital intensity, exporters still pay higher wages and employ more skilled workers than non exporters. Second, we consider the engagement of firms in international transactions, either by means of exports, imports or a combination of the two. We show that failing to control for the importing activities may bias upward export premia. Third, we look at how the wage and the employment structures of trading firms change with the country of destination and origin of trade flows. We find that wage and skill premia increase for both exporters and importers as they trade with more distant markets. Richer countries are instead associated with higher premia for importers and not for exporters.heterogeneous firms; exports; imports; productivity; market of destination and origin

Exporting under financial constraints: margins, switching dynamics and prices

Using data on cross border transactions together with an informative measure of financing constraints this paper provides new evidence that limited access to external capital narrows the scale of foreign sales, the exporters? product scope and the number of trade partners. It shows that constrained firms have a reduced probability of adding and a higher probability of dropping products and destinations. Further it documents that constrained firms sell their products at higher prices as compared to unconstrained firms. All the results are robust to specific control for unobserved heterogeneity, self-selection into export and potential endogeneity of the financial constraints proxyfinancial constraints, margins of export, export prices

Firms in International Trade: Importers and Exporters Heterogeneity in the Italian Manufacturing Industry

This paper offers a portrait of Italian firms that trade goods. Combining data on firms' structural characteristics and economic performance with data on their exporting and importing activity, we uncover evidence supporting recent theories on firm heterogeneity and international trade, together with some new facts. In particular, we find that importing can be as important as exporting as a source of firm heterogeneity. First, we document that trade is more concentrated than employment and sales, and we show that import is even more concentrated than export both within sectors and along the sector and country extensive margins. Second, while supporting the fact that firms involved in both importing and exporting (two-way traders) are the best performers, we also find that firms involved only in importing activities perform better than those involved only in exporting. We submit that this may have to do with being mainly importers of high-tech capital goods. Third, the performance premia of internationalized firms correlate relatively more with the degree of geographical and sectoral diversification of imports.Heterogeneous firms; Exports; Imports

Exporters, Importers and Two-way traders: The links between internationalization, skills and wage

How do trade activities affect firms' employment and wages structures? Using firm level data on Italian manufacturing firms, this paper adds to the existing literature, by assessing how the degree of involvement in international trade impacts on workforce composition, earning levels and wage inequality. We differentiate firms involved in both trading activities - namely two-way traders - from firms that only export, and from those that only import. We show that two-way traders have a higher propensity to employ non-production workers, exhibit significant wage gaps, but also pay higher wages for both production and non production workers, relative to non international- ized firms and to firms which are involved only in either export or import. The paper also looks at how the wages and the skill structure of the trading firms change with the country of destination and origin and with the firms' sectoral and geographical diversification.Heterogeneous Firms; Exports, Imports, Wage Inequality, Skills

Intermediaries in International Trade: Direct versus indirect modes of export

This paper examines the factors that give rise to intermediaries in exporting and explores the implications for trade volumes. Export intermediaries such as wholesalers serve different markets and export different products than manufacturing exporters. In particular, high market-specific fixed costs of exporting, the (lack of) quality of the general contracting environment and product-specific factors play important roles in explaining the existence of export intermediaries. These underlying differences between direct and intermediary exporters have important consequences for trade flows. The ability of export intermediaries to overcome country and product fixed costs means that they can more easily respond along the extensive margin to external shocks. Intermediaries and direct exporters respond differently to exchange rate fluctuations both in terms of the total value of shipments and the number of products exported as well as in terms of prices and quantities. Aggregate exports to destinations with high shares of indirect exports are much less responsive to changes in the real exchange rate than are exports to countries served primarily by direct exporters.

Intermediaries in International Trade: direct versus indirect modes of export

This paper contributes to the relatively new literature on the role of intermediaries in international trade. Using Italian firm-level data, we document significant differences between exporters of different types and highlight the role of country-specific fixed cost in the choice of direct versus indirect modes of export. Recent theoretical work suggests that intermediaries are typically providing solutions to country-specific fixed costs. Our empirical results largely confirm this relationship. Measures of country fixed costs are positively associated with intermediary exports both in the aggregate and within firms. In contrast, proxies for variable trade costs are largely not correlated with differences between direct and indirect exports.heterogeneous firms, international trade, intermediation, wholesalers

Intermediaries in International Trade: direct versus indirect modes of export

This paper contributes to the relatively new literature on the role of intermediaries in international trade. Using Italian firm-level data, we document significant differences between exporters of different types and highlight the role of country-specific fixed cost in the choice of direct versus indirect modes of export. Recent theoretical work suggests that intermediaries are typically providing solutions to country-specific fixed costs. Our empirical results largely confirm this relationship. Measures of country fixed costs are positively associated with intermediary exports both in the aggregate and within firms. In contrast, proxies for variable trade costs are largely not correlated with differences between direct and indirect exports.heterogeneous firms, international trade, intermediation, wholesalers

Intermediaries in international trade : Direct versus indirect modes of export

This paper contributes to the relatively new literature on the role of intermediaries in international trade. Using Italian firm-level data, we document significant differences between exporters of different types and highlight the role of country-specific fixed cost in the choice of direct versus indirect modes of export. Recent theoretical work suggests that intermediaries are typically providing solutions to country-specific fixed costs. Our empirical results largely confirm this relationship. Measures of country fixed costs are positively associated with intermediary exports both in the aggregate and within firms. In contrast, proxies for variable trade costs are largely not correlated with differences between direct and indirect exports.