hypothesized effects on shipment sizes may be because our estimation procedure requires a contemporaneous impact of inspection activity on shipment sizes. Hornok and Koren’s crosssectional evidence implies longer-run adjustment possibilities.<sup>61</sup>

**Table 10. Estimated effect of customs clearance time on other import-related outcomes**

|||<br>Depende|<br>nt variable is f|<br>irst‐diff. at firm‐HS|<br>6 product‐origi|<br>n country‐year leve|<br>l in:||
|---|---|---|---|---|---|---|---|---|
||log import<br>quantity|log import unit<br>price|log import<br>value per<br>shipment|log number of<br>import<br>shipments|log import<br>quantity|log import unit<br>price|log import<br>value per<br>shipment|log number<br>of import<br>shipments|
||_Clearan_|_ce time measured in_|_days ‐ 2007‐2_|_012 period_<br>IV estim|ation<br>_Clearance_|_time measured in h_|_ours ‐ 2010‐20_|_12 period_|
||(1)|(2)|(3)|(4)|(5)|(6)|(7)|(8)|
|First‐diff. in median clearance time|‐0.738***|‐0.235***|‐0.079|‐0.891***|‐0.017**|‐0.006|0.006|‐0.029***|
||(0.154)|(0.083)|(0.109)|(0.089)|(0.008)|(0.005)|(0.006)|(0.004)|
|Firm*year fixed effects|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|
|HS6 product*origin country*year<br>fixed effects|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|
|Observations|200,255|200,255|200,281|200,281|84,293|84,293|84,298|84,298|
|R‐squared|0.416|0.435|0.446|0.257|0.445|0.449|0.44|0.377|
|F‐statistic from first‐stage regression|407|407|405|405|267|267|267|267|
|First‐stage coefficient on first‐diff.|||||||||
|in median allocation to red channel|0.070***|0.070***|0.070***|0.070***|1.987***|1.987***|1.987***|1.987***|
||(0.003)|(0.003)|(0.003)|(0.003)|(0.122)|(0.122)|(0.122)|(0.122)|

Notes: Robust standard errors in parentheses. *** and ** indicate significance at 1% and 5% confidence levels, respectively.

# **7.2 Effects on the Extensive Margin of Imports**

Our baseline results in Table 5 refer to the intensive margin of trade, that is, growth in imports for an existing firm-product-country. But another important dimension to consider is the effect of the customs reforms and the ensuing reduction in physical inspections on the extensive margin of trade. We define the extensive margin of trade flexibly, calculating (i) the number of importing firms per HS 6-digit product-origin country pair, (ii) the number of origin countries per firm-HS 6-digit product pair, and (iii) the number of HS 6-digit products per firm-origin country pair,. For this purpose we use the data aggregated respectively, to the HS 6-digit product-origin country-year level, the importing firm-HS 6-digit product-year level, and the importing firm-origin country-year level and we define correspondingly the median red channel allocation and time in customs. We apply the same 2SLS-IV strategy as before considering each of the three definitions of the extensive margin in turn and defining each specification appropriately. To illustrate our approach, consider the example of the two-stage specification for

> 61 Another explanation might be that the Hornok and Koren estimates rely on the Doing Business data tracking costs of shipment. These are survey data and thus subject to endogeneity concerns.  Traders in countries that routinely receive smaller shipments might be expected to report higher levels of cost per shipment.

38