Exporting Like China: Productivity, Market Demand, and Labor Frictions

ABSTRACT This paper studies Chinese firms' export status, distinguishing state and privately controlled enterprises. A dynamic model of export decisions is estimated by ownership types. The estimated models capture distinctive differences between ownership types including the productivity gap between exporters and nonexporters, the interaction between domestic and foreign sales, the skewed distribution of export shares, and the dynamic response of employment to changes in export status. Our analysis highlights the crucial role of demand shocks and labor adjustment costs in shaping the dynamics of export status, especially for privately controlled enterprises. The estimated model is used to study tariffs and uncertainty.