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The authors expect trade liberalization to give rise to aggregate productivity gains, as the least efficient firms are forced out, and labor is reallocated towards the best performing firms. But the positive intra-industry reallocation effects rely on the assumption that exporters' superior performance is due to intrinsic firm efficiency. They investigate the importance of intrinsic firm efficiency relative to input quality as sources of exporters' productivity premium, employing a matched employer-employee data set for Norwegian manufacturing.
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