The seen and the unseen

What accounts for a firm’s success or failure in exporting?

A new NBER working paper by Molina & Muendler investigates this question in a sample of Brazilian firms.

Here’s the abstract:

Exporters differ considerably in terms of export-market participation over time and employment size. But this marked diversity among exporters is not reflected in their workforce composition regarding commonly observed worker skills or occupations. Using Brazilian linked employer-employee data, we turn to a typically unknown worker characteristic: a worker’s prior experience at other exporters. We show that expected export status, predicted with current destination-country trade instruments, leads firms to prepare their workforce by hiring workers from other exporters. Hiring away exporter workers is associated with both a wider subsequent reach of destinations and a deeper market penetration at the poaching firm, but only with reduced market penetration at the firm losing the worker. This evidence is consistent with the hypothesis that expected export-market access exerts a labor demand shock, for which exporters actively prepare with selective hiring, and with the idea that a few key workers affect a firm’s competitive advantage.

In other words, workers in successful and unsuccessful export firms look alike on their observable characteristics, but there is a pool of exceptional workers, and the firms know who they are!

Great stuff!

If the link to the article provided above is gated or expired, an older version of the paper is available via Google Scholar.

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