Exporter Dynamics, Firm Size and Growth, and Partial Year Effects some exports in the following calendar year t+1. The solid columns are the average first year growth rates by month of entry for all firms using the raw calendar data. The growth rates are given as the deviation from the average across all months and years. As expected, partial year effects cause the growth rates based on the calendar year data to rise systematically across the months with the lowest for January entrants (81 log points below the mean) and the highest for December entrants (108 log points above the mean). The striped columns show the same growth rates relative to the mean for first year export growth adjusting for the month of entry. The systemic relationship between entry month and export growth is eliminated and the pattern partly reverses.<sup>21</sup> On average the growth rates of all new exporters is 112 percent higher using calendar year data instead of the adjusted data.

# **5.2 Export Levels of Entrants**

Table 3 reports the average size of all new exporters in their first year relative to continuing exporters by year for the entire set of firms. As emphasized in the exporter dynamics literature, entrants are indeed much smaller than continuing exporters. However, adjusting for partial year effects increases entrant size by 65 percent.<sup>22</sup> In addition there is a noticeable downward trend over time in the relative size of entrants, calculated by either method. This decline is due to the systematic increase in the size of continuing exporters rather than a decline in the size of entrants. Table 4 shows that adjusting for partial year effects varies systematically across months. Entrants in December on average have a 599 percent increase in the measured first year exports.

# **5.3 Firm Size Distribution**

The downward bias in levels for new exporters in a market has the potential to shift the export firm size distribution. In the raw data typically used to calculate the firm size distribution, new entrants are not measured with a full year’s sales in the market. Measuring their firm size with a full year of export sales would increase their size and since exporters are typically smaller firms these adjustments should have the biggest effects in the left tails of the distribution. We investigate the effects of partial year effects on the export size distribution of Peruvian firms in the US market.<sup>23</sup> As is the case in many exporting countries, a large fraction of Peruvian exporters are new to the market each year. The US market is no exception, fully 45.8 percent of Peruvian exporters in the US are new in each year. These new exporters vary substantially in initial size. Figure 7 shows the percentage of new exporters in the export size distribution for firms serving the US market. The

> 21The lower growth rates for entrants in later months comes from a truncation of the sample. Firms are included if they report exports in years t and t+1 whether or not they continue to export past December, t+1. The later months include a greater fraction of firms that no longer export to the US in year t+2 and thus have small exports in their second year in the market due to exit.

> 22This is twice as large as the size correction reported for new French exporters by Berthou and Vicard (2013).

> 23The patterns in other destinations market are largely unchanged.

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