Topics in Productivity, Exporting and Outsourced Services

This dissertation is a collection of three empirical studies using the a survey of Chilean Manufactures. The first two chapters of this dissertation evaluates the productivity impact of exporting and service outsourcing. The last chapter evaluates selection mechanisms into exporting.The first chapter examines productivity and exporting. I find that asymmetric responses, between exporters and non-exporters, to changes in the domestic lending rate can cause propensity-score-matching-difference-in-differences to underestimate the effect of export entry if these asymmetries are not accounted for in propensity-score-matching. Further, this chapter shows show a significant productivity effect of export entry after allowing unobserved time effects to interact with unobserved plant fixed effects. I find that export entry can cause firms to be as much as 20 percent more productive on average than they would have been if they did not export after I allow these macroeconomic time effects to have different impacts based on treatment status using a newly developed method by Hsiao, Ching, and Wan (2012). This paper highlights the use of general models, such as HCW, as a tool to help researchers test possible misspecification that can arise when unobserved heterogeneity interacts with the macro-environment and the unobserved effects are not netted out with propensity-score-matching. In the second chapter, I measure the productivity impact of outsourcing business services. Firm level studies on the impact of service adoption have remained sparse and when they do exist, the identification issue of selection is not addressed in a rigorous way. The work in this dissertation identifies the productivity effect of service adoption, while controlling for selection. I find that freight, accounting and advertising service outsourcing can boost productivity but I do not find any productivity effects for foreign technical support. The last Chapter evaluates the selection effect into exporting. I cannot find any evidence showing that productivity alone causes export entry. However, I do identify entrepreneurial type and business service outsourcing as two factors that increase productivity as well as increase the likelihood of entering foreign markets