Wage Effects of Unionization and Occupational Licensing Coverage in the United States
Morris Kleiner, Visiting Scholar
January 2016 | Industrial Labor & Relations Review, 69:1, p. 142-172. | With Maury Gittleman
We show that after firms enter new export markets, there are striking dynamics of quantities, but no dynamics of prices, controlling for both costs and selection. This points to an important role for demand in the growth of successful exporters, and to a nonprice mechanism through which quantity demanded grows. A model where firms engage in costly investment in customer base through marketing and advertising, and learn about their idiosyncratic demand, can qualitatively match these facts, along with a declining exit hazard. We structurally estimate the model and find that costs of adjusting customer base are key to explaining how exporters grow.