Changing trade barriers and Canadian firms

The firm level hypothesis suggests that the success or failure of a given firm is primarily a result of the characteristics of the firm itself. [...] Accordingly, the estimated coefficients will describe the direction in which the underlying variables influence the probability of survival and the relative importance of firm and industry variables, but will not directly reveal the marginal contributions of each variable to firm survival. [...] Combining these results, Xit comprises of the cost of leverage, the size of the firm and the productivity of the firm. [...] In order to consider firm survival beginning in 1989, and to circumvent the difficulties involved in partial year reports, particularly in the case of the employment measure4, we restrict the population of firms included in our analysis to those that operated for the full year in 1988. [...] For all specifications, the larger the decrease in Canadian tariffs (or the larger the decrease in protection for a given industry), the lower the probability of survival.