An account of the exporter wage gap: Wage structure and composition effects across the wage distribution

Abstract

AbstractGlobalisation is a prominent driver of wage inequality in advanced economies, and wage differentials paid by the exporter vis‐à‐vis domestically oriented firms play an unmistakable role. In this paper, we measure and decompose the exporter wage gap into several explanatory components by estimating counterfactual distributions for the Spanish economy between 2006 and 2014. To measure the exporter wage gap, an extended Mincer‐type wage equation is estimated along different points of the wage distribution using Unconditional Quantile Regression. Then, we apply the technique of Fortin, Lemieux and Firpo to decompose the exporter wage gap. We find that workers earn higher wages if they work in an exporting firm and that these differences are not constant across the wage distribution: they are greater for middle and middle‐high wages and narrower at the extremes of the distribution. Moreover, the exporter wage gap increased during and after the Great Recession. Characteristics, especially those related to firm and job heterogeneity, play an important role in explaining the gap, mainly in the upper part of the wage distribution. Though in the lower part, wage structure also plays an important role. With some variation across periods, there is a consistent pattern in which occupation, sector and firm size lead to an exporter wage premium resulting in a more unequal wage distribution. These factors are partially compensated by other factors, such as the collective bargaining system.