Entry to Export Markets and Productivity: Analysis of Matched Firms in Turkey

Abstract

There are sunk costs associated with exporting, hence some firms export and others do not. Research shows that exporters are more productive, employ more workers, and have more capital. Nevertheless, this association does not give a causal relation between firm-specific characteristics and exporting. Therefore, we investigate the effect of entering into export market on productivity and employment with firm-level data using matching and difference-in-difference techniques. We end up with two main conclusions. First, larger and more productive firms self select into export market. Second, starting to export further increases labor productivity and employment.Exporting, productivity, matching, difference in difference