Uncertainty in Firm Productivity Shapes Global Trade Selection Effect.
Trade liberalization can boost industry productivity by shifting resources to more efficient firms. This happens because firms with higher productivity tend to survive and grow. However, previous studies did not consider uncertainty in firm productivity. Our research focuses on how uncertainty in factor productivity affects firm performance. Factors like labor and regulations can create uncertainty in productivity levels. We found that this uncertainty plays a crucial role in determining which firms succeed in the market.