We investigate to what extent worker heterogeneity explains the well-known wage and productivity exporter premiums, employing a matched employer-employee data set for Norwegian manufacturing. The wage premium falls by roughly 50% after controlling for observed and unobserved worker characteristics, while the total factor productivity premium falls by 25% to 40%, suggesting that sorting explains up to half of these premiums. Recent trade models emphasize the role of within-industry reallocation of labor in response to various shocks to the economy. Our findings suggest that aggregate productivity gains due to reallocation may be overstated if not controlling for sorting between firms and workers.

This paper studies the impact of an R&D cost shock on R&D investments, imported inputs, and their joint impact on firm performance. We introduce imported inputs into a model of R&D and endogenous productivity, and show that R&D and international sourcing are complementary activities. Exploiting the introduction of an R&D tax credit in Norway in 2002, we find that cheaper R&D stimulated not only R&D investments but also imports of intermediates, quantitatively consistent with the model. An implication of our work is that improved access to imported inputs promotes R&D investments and, ultimately, technological change.

This paper analyzes international externalities of a local shock to the global shipping network. The 2016 Panama Canal expansion removed a bottleneck in seaborne transportation. Using reduced-form and structural methods in combination with novel satellite data on ships, we find that trade increased significantly among country-pairs using the canal. We find that the global real income gains from the canal expansion were over three times greater than the income gains for Panama itself. A link removal analysis reveals that most shipping links are associated with positive and quantitatively important positive international externalities.