A recent survey of 54 micro-econometric studies reveals that exporting firms are
more productive than non-exporters. On the other hand, previous empirical studies
show that exporting does not necessarily improve productivity. One possible reason
for this result is that most previous studies are restricted to analysing the relationship
between a firm’s export status and the growth of its labour productivity, using
the firms’ export status as a binary treatment variable and comparing the performance
of exporting and non-exporting firms. In this paper, we apply the newly developed
generalised propensity score (GPS) methodology that allows for continuous treatment,
that is, different levels of the firms’ export activities. Using the GPS method
and a large panel data set for German manufacturing firms, we estimate the relationship
between a firm’s export-sales ratio and its labour productivity growth rate.
We find that there is a causal effect of firms’ export activities on labour
productivity growth. However, exporting improves labour productivity growth only
within a subinterval of the range of firms’ export-sales ratios.