Joel Rodrigue

Firm‐Level Investment and Export Dynamics

This article characterizes the complementarity between exporting and investment in physical capital. We argue that new investment allows young exporters to grow faster and survive longer in export markets while reducing their vulnerability to productivity or demand shocks across markets. We structurally estimate our model using detailed firm‐level data. We find that the choice of cost structure has a large impact on model performance and the estimated costs of exporting or investment. Using detailed capital and output tariff rates, we quantify the impact of policy change on aggregate export and investment growth.

Growing into Export Markets: The Impact of Exporting on Firm‐Level Investment in Indonesia

This paper documents the impact of exporting on capital accumulation across heterogeneous manufacturing firms in Indonesia. The findings show that entering export markets significantly increases investment behavior during the year of initial entry and for as much as three years after entry. The results imply that the investment rate among new exporters is 37% higher than non-exporters in the year of entry and 14–26% higher in the three years after entry. Using detailed data on firm ownership, the paper further show that foreign-owned affiliates invest at systematically higher rates upon entry into export markets. The estimates indicate that domestically owned exporters are potentially credit constrained and suggest that improving credit market access may increase the investment rate among domestic exporters by as much as 40% in the year of entry.

On-the-job-search, wage dispersion and trade liberalization

This paper builds a dynamic, general equilibrium, open economy model that allows for ex ante homogeneous workers to experience different wage growth before and after trade liberalization. Key features of our model include a product market composed of heterogeneous firms and a labour market characterized by directed, on-the-job-search and dynamic contracts. We characterize the complementarity of these two sources of wage dispersion in an open economy setting where trade liberalization affects the endogenous equilibrium set of producers and the structure of wages. We find that worker job-to-job transitions, through on-the-job search, increases the impact of trade liberalization on wage dispersion by 4%.