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Unobserved heterogeneity in the productivity distribution and the gains from trade

Ruben Dewitte (UGent) , Michel Dumont (UGent) , Glenn Rayp (UGent) and Peter Willemé (UGent)
(2022) CANADIAN JOURNAL OF ECONOMICS-REVUE CANADIENNE D ECONOMIQUE. 55(3). p.1566-1597
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Abstract
Finding a good parametric approximation to the productivity distribution is a problem of general interest. This paper argues that heterogeneity in productivity is best captured by finite mixture models (FMMs). FMMs build on the existence of unobserved subpopulations in the data. As such, they are generally consistent with models of firm dynamics differing between groups of firms and allow for a very flexible distribution fit. Relative to commonly used parametric alternatives, we find that FMMs are the only distributions able to provide a sufficiently good fit to the data. A gains from trade exercise with Portuguese data reveals that only FMMs approximate the "true" gains reasonably well.
Keywords
Finite mixture model, firm size distribution, productivity distribution, gains from trade

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MLA
Dewitte, Ruben, et al. “Unobserved Heterogeneity in the Productivity Distribution and the Gains from Trade.” CANADIAN JOURNAL OF ECONOMICS-REVUE CANADIENNE D ECONOMIQUE, vol. 55, no. 3, 2022, pp. 1566–97, doi:10.1111/caje.12613.
APA
Dewitte, R., Dumont, M., Rayp, G., & Willemé, P. (2022). Unobserved heterogeneity in the productivity distribution and the gains from trade. CANADIAN JOURNAL OF ECONOMICS-REVUE CANADIENNE D ECONOMIQUE, 55(3), 1566–1597. https://doi.org/10.1111/caje.12613
Chicago author-date
Dewitte, Ruben, Michel Dumont, Glenn Rayp, and Peter Willemé. 2022. “Unobserved Heterogeneity in the Productivity Distribution and the Gains from Trade.” CANADIAN JOURNAL OF ECONOMICS-REVUE CANADIENNE D ECONOMIQUE 55 (3): 1566–97. https://doi.org/10.1111/caje.12613.
Chicago author-date (all authors)
Dewitte, Ruben, Michel Dumont, Glenn Rayp, and Peter Willemé. 2022. “Unobserved Heterogeneity in the Productivity Distribution and the Gains from Trade.” CANADIAN JOURNAL OF ECONOMICS-REVUE CANADIENNE D ECONOMIQUE 55 (3): 1566–1597. doi:10.1111/caje.12613.
Vancouver
1.
Dewitte R, Dumont M, Rayp G, Willemé P. Unobserved heterogeneity in the productivity distribution and the gains from trade. CANADIAN JOURNAL OF ECONOMICS-REVUE CANADIENNE D ECONOMIQUE. 2022;55(3):1566–97.
IEEE
[1]
R. Dewitte, M. Dumont, G. Rayp, and P. Willemé, “Unobserved heterogeneity in the productivity distribution and the gains from trade,” CANADIAN JOURNAL OF ECONOMICS-REVUE CANADIENNE D ECONOMIQUE, vol. 55, no. 3, pp. 1566–1597, 2022.
@article{8738462,
  abstract     = {{Finding a good parametric approximation to the productivity distribution is a problem of general interest. This paper argues that heterogeneity in productivity is best captured by finite mixture models (FMMs). FMMs build on the existence of unobserved subpopulations in the data. As such, they are generally consistent with models of firm dynamics differing between groups of firms and allow for a very flexible distribution fit. Relative to commonly used parametric alternatives, we find that FMMs are the only distributions able to provide a sufficiently good fit to the data. A gains from trade exercise with Portuguese data reveals that only FMMs approximate the "true" gains reasonably well.}},
  author       = {{Dewitte, Ruben and Dumont, Michel and Rayp, Glenn and Willemé, Peter}},
  issn         = {{0008-4085}},
  journal      = {{CANADIAN JOURNAL OF ECONOMICS-REVUE CANADIENNE D ECONOMIQUE}},
  keywords     = {{Finite mixture model,firm size distribution,productivity distribution,gains from trade}},
  language     = {{eng}},
  number       = {{3}},
  pages        = {{1566--1597}},
  title        = {{Unobserved heterogeneity in the productivity distribution and the gains from trade}},
  url          = {{http://doi.org/10.1111/caje.12613}},
  volume       = {{55}},
  year         = {{2022}},
}
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