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Media type:
E-Article
Title:
Trade shocks, product mix adjustment and productivity growth in Italian manufacturing
Contributor:
Ladu, Maria Gabriela;
Linarello, Andrea;
Oropallo, Filippo
imprint:
Wiley, 2020
Published in:The World Economy
Language:
English
DOI:
10.1111/twec.12927
ISSN:
0378-5920;
1467-9701
Origination:
Footnote:
Description:
<jats:title>Abstract</jats:title><jats:p>In this paper, we use firm‐level data on the universe of Italian manufacturing multi‐product exporters to test whether demand shocks in export markets lead multi‐product exporters to increase their productivity. The main mechanism behind the documented productivity gains is the reallocation of resources across products within firms (<jats:italic>American Economic Review</jats:italic>, 104, 2014 and 495; <jats:italic>National Bureau of Economic Research Working Paper Series No. 22433</jats:italic>, 2016). Intuitively, the increased demand stemming from foreign markets will induce firms to adjust their product mix by moving inputs from low to high productive/profitable uses. We find that these productivity gains are significant and can explain between 1/10 and 1/2 of aggregate productivity growth in the manufacturing sector.</jats:p>