This paper identifies productivity gains from trade by studying the manipulation behavior of firms in response to regulatory policies on international trade in China. Bunching estimates show that participation in international trade increases firm productivity. The productivity gains increase over time, indicating dynamic learning from trading. Further exploration shows no effects on R&D investment, product rationalization and markup. Young firms and nonstate-owned firms (non-SOEs) gain more from participating in trade. Workers share productivity gains through increased wages but not from increased employment.

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© 2023 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology
2023
The President and Fellows of Harvard College and the Massachusetts Institute of Technology

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