TY  - BOOK
AU  - Demir,Banu
AU  - Fieler,Ana Cecília
AU  - Xu,Daniel
AU  - Yang,Kelly Kaili
ED  - National Bureau of Economic Research.
TI  - O-Ring Production Networks
T2  - NBER working paper series
PY  - 2021///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - February 2021; Hardcopy version available to institutional subscribers
N2  - We study a production network where quality choices are interconnected across firms. High-quality firms are skill intensive and trade more with other high-quality firms. Using data from Turkish firms, we document strong assortative matching of skills in the production network. A firm-specific export demand shock from a rich country increases the firm's skill intensity and shifts the firm toward skill-intensive domestic partners. We develop a quantitative model with heterogeneous firms, endogenous quality choices, and network formation. An economy-wide export demand shock of 5 percent induces exporters and non-exporters to upgrade quality, raising the average wage by 1.2 percent.  This effect is about nine times the effect in a special case of the model with no interconnection of quality choices
UR  - https://www.nber.org/papers/w28433
UR  - http://dx.doi.org/10.3386/w28433
ER  -