The Efficient Triangle: Export Persistence, Human Capital, and Productivity

The impact of exports on productivity is a central theme in macroeconomics, explored in both the 'learning by exporting' and 'Kaldor-Verdoorn law' literature. We utilize a novel dataset of Italian firm microdata to build an empirical model examining the effect of persistent exporting on firm productivity. The model endogenizes a firm's export propensity using a probit specification that enables us to derive consistent estimates of the impact of exporting on productivity. In addition, we use the share of highly educated workers as a proxy of human capital to test the ability of persistently exporting firms to learn. This impact is derived using a biprobit specification, which enables us to endogenize the joint probability of being a continuously exporting firm while highly endowed with a skilled workforce. The results strongly support the hypothesis that persistent exporters show a significant productivity premium compared to occasional exporters. Moreover, the workforce's education level further increases productivity, with results supporting the hypothesis that highly educated shares of a firm's workforce enhance the ability to learn.